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Are all employers required to provide the California Employee Tax Information/EITC Information Booklet to all employees?
- As of January 1, 2024, California law requires employers to provide all employees with an expanded notification of the availability of Federal and State tax credits and programs. The precise content of the notification is specified by statute.
- In addition, employers are now required to provide the notification to employees two (2) times each year.
What must be included in the employee notification of the availability of tax credits and programs?
The California law (R&T § 19853) requires the notification to advise all employees that they may be eligible for:
- The Federal Earned Income Tax Credit (Federal EITC)
- The California Earned Income Tax Credit (CalEITC)
- The Federal “Voluntary Income Tax Assistance” (VITA) tax return preparation and filing program, and
- The California “CalFile” tax return e-filing program.
The California Employee Tax Information/EITC Information Booklet (“Booklet”), also includes the required Federal IRS Notice 797, EITC pub. 962, and IRS Qualifying Child Rules.
When and how must employers provide the notification to employees?
The notification of the availability of Federal and State tax credits and programs must be provided:
- The first time, within one week before or after, or at the same time, that the employer provides an annual wage summary (IRS Form W-2 or Form 1099) to any employee.
- The second time, during the month of March of the same year in which the employer provided the first notification.
- The first notification must be handed directly to the employee or mailed to the employee’s last known address. This requirement cannot be satisfied by posting the notice on an employee bulletin board or sending it through office mail.
- The second notification can be handed directly to the employee or sent to the employee electronically.
Federal EITC IRS Notice 797
The California Employee Tax Information Booklet also includes IRS Notice 797. For the current Tax Year, Notice 797 includes the amount of tax credits an eligible employee could receive given the number of qualifying children the employee can claim. It also informs employees of how to claim the Federal EITC, provides additional tax preparation and filing information, and how to contact the IRS to obtain additional information.
IRS Qualifying Child Rules
The Booklet also contains a detailed explanation of the rules that determine whether an employee qualifies for a greater tax benefit based on the number of qualifying children the employee can claim. The qualifying factors are: (1) relationship, (2) age, (3) residency and (4) joint return. The Booklet also contains the IRS’ explanation of the “tie-breaker” rules that apply when a child is a qualifying child of more than one person.