Payroll Credits & Earned Income Credit

Credits are the opposite of withholdings and are rarely used. They add money to paychecks rather than subtracting from them. Credits are usually offered through a state or federal program. The Earned Income Tax Credit (known as EITC or just EIC) is one such program.

Before You Begin

1. Before assigning any credits to a staff member you’ll want to confirm they meet the requirements for that credit. This most often applies to the Federal Earned Income Credit. Visit www.irs.gov and search for EIC or EITC to learn more.
   Important! Beginning in 2011 EIC is no longer advanced to people on individual paychecks. Therefore it is not necessary to assign the EIC credit to them as the amount added to their checks would be zero. See IRS questions about the Advance Earned Income Credit.

2. The Credit you wish to use must exist as a standard formula within Procare or you may set up a custom Payroll Formula and define it as a “credit”. Since credits are rare it is best to confirm the details with your tax advisor then Contact Support for assistance with set up. Depending on complexity, fees may apply.

Getting There

Look Up an Employee and click the Credits icon (money with plus sign) on the toolbar.

Assign Credits to Employee

1. At the Employee Standard Credits screen a list of the credits currently assigned to this employee will be displayed. To add credits click New Credit (lower left).
2. At the Credit Editor you’ll select the credits for this person. Select a Category and Class Name, usually “Federal” and “EIC”. then click the Load button.
3. Type a Comment if you wish (optional).
4. Enter a Value for any variables that apply to this credit such as a 1, 2, or 3 to indicate the filing status.
5. With the appropriate Values entered for this employee click Save > Exit to return to the list of credits assigned to this person. Then click Exit once more.
   Note: it would be unusual to have any credits other than EIC.