COMPTROLLER'S SEAL STATE OF CONNECTICUT
STATE OF CONNECTICUT
WILLIAM E. CURRY JR.
COMPTROLLER
OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
EDWARD J. FORAND JR.
DEPUTY COMPTROLLER

MEMORANDUM NO. 94-15

June 6, 1994

TO THE HEADS OF ALL STATE AGENCIES

Attention: Payroll and Personnel Officers
Subject: EIC (Earned Income Credit)

Earned Income Credit (EIC) is a Federal tax program that allows certain individuals to receive a withholding tax credit. Eligible employees may elect to receive advanced payments of EIC in their paychecks by completing Form W-5. Due to the complexity of the rules for qualifying for this program, agency personnel should not be advising employees on whether or not they qualify. Employees should be referred to their accountant or the IRS. Agencies or employees who would like additional information can request publication #596 from the IRS.

Upon entering the appropriate transaction into the payroll system, the EIC amount is calculated on all earnings payments (including supplemental and bonus payments) at the time Federal withholding taxes are calculated (after all other earnings and excludable deductions have been processed). The EIC payment is added directly to the net pay, it is not available for withholding of any deductions (mandatory or optional). It is included in other earnings on the payroll register and will be reported separately on the employees' W-2 form.

Advance EIC payments are not to be requested in the net amount of any petty cash checks requested. The employee will receive the advanced credit on the petty cash recovery cycle.

Payroll Procedures

Upon receipt of Form W-5, initiate advanced EIC payment by creating an RK transaction using D/OE 3B and the following examples:

On Line Agencies

D/OE O M P T AMT/PCT/TBL   OTHER CD
3B Blank A = 1 Spouse filing
B = Both Spouses filing
A O Blank Blank Blank
Form Agencies
Employee Number D/OE Code OR Code MC PC Type D/OE Amount Sort Code
Enter employee number 3B Blank A = 1 Spouse filing
B = Both Spouses filing
A O Blank Blank

Remote Job Entry (RJE)
Generate an RK transaction with the following information:
Record Positions
1-2 3-4 5-6 7-16 17-18 19 20 21 22 23-80
RK CT L2 Employee Number 3B Blank A = 1 Spouse filing
B = Both Spouses filing
A O Blank

WILLIAM E. CURRY JR.
STATE COMPTROLLER

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