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Schedule M of Form 1040

The Making Work Pay tax credit passed by President Obama and Congress means you have to file Schedule M

Attach the Schedule M form to your 2009 or 2010 tax return to claim the Making Work Pay credit

You need to fill out Schedule M if you want to claim the Making Work Pay credit for 2009 or 2010.

The Making Work Pay credit was a special provision of the American Recovery and Reinvestment Act only applicable for 2009 and 2010. It was discontinued in 2011, which means that you don’t need to fill out a Schedule M for the 2011 or 2012 tax years.

Making Work Pay is a refundable credit – which means you can get money back from the IRS even if you don’t have a tax liability.

Most people who earned income from work in 2009 or 2010 were eligible for it and should have received it through withholding, in the form of slightly larger paychecks. The credit is worth up to $400, or $800 for a married couple filing jointly.

Even though the payments were made through decreased withholding, if you qualify for the credit you must still claim it on your tax return by filling out Schedule M and attaching it to your 1040 or 1040A.

You are not eligible for the Making Work Pay credit if

  • your adjusted gross income (which can be found on line 38 of your 1040) is greater than $95,000, or $195,000 for a married couple filing jointly
  • you are a nonresident alien
  • someone else claims you as a dependent on their tax return.

Also, the Making Work Pay credit will be reduced if you or the spouse with whom you file a joint return received a $250 economic recovery payment in 2010.

Don’t worry, the Making Work Pay credit will not affect your eligibility for welfare benefits, including

  • Temporary Assistance for Needy Families (TANF)
  • Medicaid or SSI
  • Supplemental Nutrition Assistance Program (food stamps)
  • low-income housing

Congress and the President got rid of the Making Work Pay credit for 2011 and 2012. It was replaced by a 2% reduction in the payroll withholding tax. This new tax cut is also administered through payroll tax, but unlike the Making Work Pay credit, it does not require you to attach a Schedule M or another other form to your tax return. In this respect it is considerably less of a headache for taxpayers and makes tax season that much simpler.

So, you should only file a Schedule M with your 2009 or 2010 taxes. And even though you already received the money through withholding, the IRS still needs to account for all of the credits and make sure that everyone received the correct amount.

To file a past tax return from 2009 or 2010, visit PriorTax today.

Photo via JD Hancock on Flickr.

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