Let’s walk through some common questions we’re seeing and answers that will help you today. We’ll kick it off now.
Although you might not have noticed, your federal income tax withholdings from your paycheck were adjusted in your favor during 2009 and 2010.
The change was made automatically to account for the Making Work Pay Credit.
You: Didn’t work already pay?
For most people.
You: Then what’s this credit for?
An opportunity to receive even more money from the same amount of work.
You: I like the sound of that. But you said I have the money already, yes?
You: So I don’t need to fill out any special forms then, right?
You: What? You just said I already have the money.
Although you effectively received the Making Work Pay credit money via your larger paychecks, you still need to file a Schedule M with your 2010 tax return.
You: And if I don’t?
You will not find out if you received full credit in your paycheck, are due more, or in some cases may not have had enough withheld. You may also have an error in your tax return and it will not match IRS records. Or you can put, you may be giving money back that is owed to you.
When you file Schedule M, you claim your credit. Also, the IRS has information regarding payments that may reduce your credit like the Economic Recovery Payment. You have to put Economic Recovery Payment information on schedule M.
You: Is all this, pardon the expression, work worth it? How much money are we talking about here?
Four hundred dollars for a single person. If you’re married, $800 total.
You: Woah – okay. I’m on that. Is everyone eligible?
You: Here it comes. Who doesn’t get the credit?
Ineligible taxpayers are people who:
• Didn’t work in 2010
• Are non-resident aliens
• Can be claimed as a dependent on another person’s return
• Made too much money
• Do not have a valid social security number
You: Made too much money in whose opinion?
You: How much is too much?
More than $95,000 if you’re single; twice that—or more than $190,000—if you are married and filing jointly.
You: So if I don’t qualify for the credit?
You won’t get the money. But then again, you won’t have to file Schedule M.
You: A silver lining to be sure; but I’d rather fill out the form and get $400.
Good—odds are, you qualify. Go get your money. Where else are you going to make $400 by just filling out a form? And more good news, TurboTax automatically calculates Making Work Pay Credit for you. Just for kicks, here’s an overview of How to File Schedule M.