Payroll Forms W2, W3, 941 and 944 Will Change Due to the Elimination of AEIC in 2011


A number of US Payroll Forms will change in tax year 2011 due to the elimination of Advance Earned Income Credit (AEIC) after December 31, 2010. Employers and payroll preparers can rely on our payroll tax solution to prepare the most up to date versions of these forms and stay compliant with the IRS regulations.

The advance EITC allows taxpayers who expect to qualify for the Earned Income Tax Credit (EITC) and have at least one qualifying child to receive part of the credit in each paycheck during the year the taxpayer qualifies for the credit. The credit is sometimes called the AEITC.

On August 10, the “Education Jobs and Medicaid Assistance Act of 2010” was signed into law. The new law will fund the jobs of an estimated 140 thousand teachers who would otherwise have lost their jobs, and it will also help states with Medicaid costs.

To pay for these new provisions, the EJA act makes a number of changes to the foreign tax credit and eliminates the advance payment option for the earned income credit (EITC).

Beginning with 2011 employers will no longer need to report advance payments of earned income credit. This means that a number of payroll forms where AEIC is currently reported will change. The list of US payroll forms will most probably include:

Form 941 – Employer’s QUARTERLY Federal Tax Return
Form 944 – Employer’s ANNUAL Federal Tax Return
Form 943 – Employer’s Annual Federal Tax Return for Agricultural Employees
Form 941-X – Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund
Form W2 – Wage and Tax Statement
Form W3 – Transmittal of Wage and Tax Statements
Form W-2c – Corrected Wage and Tax Statement
Form W-3c – Transmittal of Corrected Wage and Tax Statements

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