Employers Requirement to Notify Employees of Earned Income Tax Credit Eligibility

Employers are required to notify employees if they qualify for the Earned Income Tax Credit. The Earned Income Tax Credit is a credit that a working taxpayer can receive from both the IRS and the State of Maryland. The amount the employee can receive is based upon the employee’s income and their filing status. The notice must be sent to an employee on or before December 31 of the current tax year and must be sent annually if the employee qualifies.

The Comptroller of Maryland has provided a sample notice, which is posted below and contains the qualifying information that an employer must provide their employees.

IMPORTANT NOTICE TO MARYLAND EMPLOYEES

Did you know that federal and Maryland earned income tax credits are available to certain low-income individuals and families?

These credits can reduce the amount of income tax you owe or increase your income tax refund; and you may qualify to receive some of these credits even if you did not earn enough income to be required to file a tax return.

2023 Maryland Earned Income Tax Credit (“EITC”)

Maryland’s Earned Income Tax Credit is a tax credit for certain taxpayers who have income and have worked. The state Earned Income Tax Credit reduces the amount of Maryland tax you owe. The local Earned Income Tax Credit reduces the amount of county tax you owe. Some taxpayers may even qualify for a refundable Maryland Earned Income Tax Credit. If the credit is refundable, then any amount of the credit beyond your tax liability will be refunded directly to you. Most taxpayers who are eligible and file for a federal Earned Income Tax Credit can receive the Maryland state and local Earned Income Tax Credit. Taxpayers who do not qualify for the federal Earned Income Tax Credit because they do not have a social security number still qualify for the Maryland Earned Income Tax Credit if they have an ITIN. The allowable Maryland credit is up to one-half of the federal credit. To be eligible for the federal and Maryland Earned Income Tax Credit, your federal adjusted gross income and your earned income must be less than the following:

Generally, to receive the Maryland EITC, you must be eligible for the federal credit. However, if you do not meet the minimum age requirement under the federal credit and are otherwise eligible for the federal credit for those without a qualifying child, or if you are otherwise eligible for the federal credit but do not have a social security number (SSN), you may claim the state earned income tax credit (calculate federal earned income credit disregarding the minimum age or SSN requirement). If your income is less than the amounts shown in this notice, visit the Internal Revenue Service Web site at irs.gov, or contact a tax advisor, to learn if you meet the other requirements. You also may be entitled to a refundable Maryland EITC and a local EITC.

If you are a part-year resident, you may be entitled to a prorated share of the credit, if you have Maryland income. Nonresidents are not eligible for the Maryland credit.

For more information about the Maryland EITC, visit our Web site at marylandtaxes.gov or call 1- 800- MD-TAXES (1-800-638-2937) or from Central Maryland 410-260-7980.

2023 Federal Earned Income Tax Credit (“EITC”)

For more information about the federal EITC, visit: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit-eitc or call the IRS at 1-800-829-1040.

Robb Longman’s extensive background in tax law provides Mr. Longman with the ability to advise his clients on all types corporate and tax issues including Maryland sales and use taxes. Mr. Longman has testified before the Maryland House of Delegates on tax matters and is currently the Secretary of the American Bar Association’s Tax Section . Mr. Longman regularly works with business and individual clients on all types of tax matters to help them minimize their taxes in their transactions and other concerns.