Advance Earned Income Tax Credit Eliminated Beginning January 1, 2011

USPS Users:

Legislation was signed into law on August 10, 2010 that repeals the Advanced Earned Income Tax Credit. Recipients should not receive Advance EITC on their paychecks after December 31, 2010. This information is available at the following IRS website under the additional EITC resources section: http://www.irs.gov/individuals/article/0,,id=96406,00.html.  There is also a slightly more descriptive blog post that talks about this change that can be found here: http://taxes.about.com/b/2010/08/16/saying-farewell-to-the-advance-earned-income-credit.htm.

Due to this change all employees need to have the E-I-C field on the USPS federal tax record set to zero once 2010 processing is completed and before any 2011 pays are ran. Since employees not receiving advance EITC will already have this flag set to zero updates should only have to be made for those employees currently receiving advanced EITC. Once again the timing of these updates is important as the flag must retain it’s current value for the remainder of the 2010 pays and for 2010 W2 processing. It must however be set to zero for all employees previous to initializing any 2011 payrolls.

We plan to disable the E-I-C field to prevent its further modification beginning with the March 2011 USPS release.