What is IRS form W-5

The IRS Form W-5 is also known as the Earned Income Credit Advance Payment Certificate. This form was previously used by employees who wanted to get a portion of their Earned Income Credit (EIC)—a significant tax benefit that in one year alone lifted 6.2 million people out of poverty—in advance, along with their pay.

While IRS Form W-5 was once commonly used, it's no longer in use. The last year the Earned Income Credit could be received was in 2010. Today, eligible employees simply need to file their individual tax returns to get the Earned Income Tax Credit (EITC), and research shows it has a strong participation rate, with approximately 79 percent of EITC-eligible taxpayers claiming the credit each year.

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What was the IRS Form W-5 for?

The W-5 form allowed eligible employees to receive advance payments of their Earned Income Credit throughout the year instead of waiting until tax filing time. This form is now obsolete and no longer accepted by the IRS.

Eligible employees could submit a Form W-5 and receive a portion of their Earned Income Credit in advance, along with their usual pay. While eligible employees can still claim their Earned Income Credit, they have to wait to claim it until the end of the year, when they file their Individual Income Tax Return, or IRS Form 1040.

What information was included in the W-5 form?

The W-5 form was a one-page document that required employees to certify their eligibility for the advance Earned Income Credit. It collected key information to confirm that the employee met the criteria. This included details like:

• Marital status, such as single or married.

• Filing status, such as single, married filing jointly, or head of household.

• Information about any qualifying children, including their age and relationship to the employee.

The employee would sign the form under penalty of perjury, confirming the information was correct.

Why is the W-5 form no longer used?

In 2010, United States tax rules changed. President Obama signed the Education Jobs and Medicare Assistance Act on August 10, 2010, which, as officially noted in a U.S. Postal Service bulletin, repeals the Advanced Earned Income Credit. The repeal took effect with the 2011 tax year.

As a result, eligible individuals can no longer elect to receive their Earned Income Credit in advance through their paycheck. They have to wait until they've filed their annual individual tax return (Form 1040).

Who was the W-5 for?

IRS Form W-5 was relevant to employees and was filed by the employee, not the employer. An employee could only have one Form W-5 per current employer. The eligible employee could submit the W-5 form to the IRS and get an advance on their Earned Income Credits without having to wait to file their Form 1040 for that tax year.

Any employee eligible for Earned Income Credits could file Form W-5. To determine eligibility, the form required specific details:

• Marital status: For example, single versus married.

• Filing status: For example, filing as a single individual, married person, head of household, joint return, or qualifying widow with a dependent child.

• Details regarding any qualifying child: The form specified terms for a qualifying child, such as being under a certain age and living with the filing individual.

Is it still possible to claim Earned Income Credits?

The Earned Income Credit, now more commonly referred to as the Earned Income Tax Credit, is still available today, with total annual expenditures that approached $65 billion by 2013. The IRS has two sets of qualifying rules for the EITC: basic and special.

To qualify for the EITC under basic rules, you must meet these requirements:

• Income limit: Earned less than $59,187 (adjusted annually)

• Investment income: Less than $10,300 for the tax year

• Documentation: Valid Social Security number

• Filing status: Haven't filed Form 2555 for foreign earned income

• Residency: U.S. citizen or resident alien for the entire tax year

There are also certain criteria you have to meet if you're separated from your spouse and not filing a joint tax return.

The IRS also has special qualifying rules for specific groups:

• Military members: Special combat pay rules apply

• Clergy: Different rules for housing allowances

• Disability situations: Modified requirements for taxpayers or family members with disabilities

The IRS has more details about who is and isn't eligible for the Earned Income Tax Credit on their website. They also have an electronic assistant to help you determine if you can apply for this type of tax credit.

What document replaced the W-5 form?

IRS Form W-5 wasn't replaced by any specific document. Because the legislation around advanced Earned Income Credits changed entirely—making it impossible to receive advanced EIC—there was no need for an alternative document to claim advanced credits.

Now employees who are eligible for Earned Income Tax Credits simply complete their individual tax return, and research finds that large portions of these refunds are often dedicated to debt payments or other deferred expenses. Depending on the individual, this could be IRS Form 1040: U.S. Individual Income Tax Return or IRS Form 1040-SR: U.S. Tax Return for Seniors.

Eligible individuals with a qualifying child must also file Schedule EIC: Earned Income Credit and attach it to their Form 1040 or 1040-SR.

Navigating modern payroll and tax compliance

While the W-5 form is a part of tax history, staying on top of current payroll and tax rules remains a critical challenge for businesses. Ensuring your team is paid correctly and compliantly, no matter where they live, is essential for building trust and avoiding risk.

For companies with distributed teams, managing these complexities across borders requires a modern solution. Oyster's global employment platform simplifies payroll, benefits, and compliance, so you can focus on growing your team without getting lost in the details. Ready to hire talent from anywhere? Start hiring globally.

FAQs

Is the W-5 form the same as a W-4 form?

No, the W-5 was for advance Earned Income Credit payments and is now obsolete, while the W-4 tells employers how much federal tax to withhold from paychecks.

Can I still get advance earned income credit payments?

No, advance payments ended in 2010 when the law was repealed. You can still claim the full credit, but only when filing your annual tax return.

What's the difference between W-5 and W-9 forms?

The W-5 was for advance Earned Income Credit payments (now obsolete), while the W-9 is used by contractors to provide their tax ID to businesses paying them.