New Law Requires Employers to Send Additional Notification with W2’s

A new law, AB 650, which many employers are just finding out about, requires employers to send language out to all employees receiving W2’s about their eligibility to file for Earned Income Tax Credit. The law is effective 1/1/08, and the notice must be sent out within one week of the W2 itself, and must include the following language:

“Based on your annual earnings, you may be eligible to receive the Earned Income Tax Credit from the federal government. The Earned Income Tax Credit is a refundable federal income tax credit for low-income working individuals and families. The Earned Income Tax Credit has no effect on certain welfare benefits. In most cases, Earned Income Tax Credit payments will not be used to determine eligibility for Medicaid, Supplemental Security Income, food stamps, low-income housing or most Temporary Assistance for Needy Families payments. Even if you do not owe federal taxes, you must file a tax return to receive the Earned Income Tax Credit. Be sure to fill out the Earned Income Tax Credit form in the Federal Income Tax Return booklet. For information regarding your eligibility to receive the Earned Income Tax Credit, including information on how to obtain the IRS Notice 797 or Form W-5, or any other necessary forms and instructions, contact the Internal Revenue Service by calling 1-800-829-3676 or through its web site at”

For YPP PEO and HR Services clients, we will take care of mailing out this new notice to employees and former employees receiving W2’s this January, so if you are a current YPP HR client, there is nothing you need to do!

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