Smart TaxesSmart Taxes

Schedule M could be worth $400

Anybody who earned wages needs to file this form, or risk paying too much in taxes.

By Jeff Schnepper Jan 25, 2010 11:45AM

You’d better use a good computer tax preparation program this year, or at least have a really good tax preparer. Otherwise, you’re gonna leave a big green bundle on the table.

 

There’s a new Schedule M that anybody with wages should file.

 

It allows you to claim the “Making Work Pay” credit of up to $400 ($800 on a joint return). That’s another $400 (or $800 for couples) right back in your pocket.

You get a cash-back of 6.2% of the wages paid, with the above caps. If you adjusted gross income is more than $75,000 ($150,000 on a joint return), your credit is reduced by 2% of the excess.

 

So, if my wife, Barbara, and I have an adjusted gross income of $190,000, our $800 credit is reduced by 2% of $40,000, and we get “buptkis.”

 

(“Buptkis” is a technical tax term that means we get no credit)

 

Now, don’t get too excited.

 

When the Making Work Pay credit was passed by Congress, our financial idiot savants wanted to get the cash to you as quickly as possible. So, they provided for a change in the amount your employer withheld from each paycheck. In effect, Congress gave you the credit last year when it took less in withholding.

 

If the credit matches the reduction in withholding, there should be no change in what you would owe Uncle Sam.

 

But, if you don’t claim the credit, your reduced withholding could have you owing the IRS as much as an additional $800.

 

If you have no earned income but are receiving Social Security, SSI railroad retirement, or veteran disability compensation benefits, your credit is $250. A retired federal employee also qualifies for the $250 credit ($500 on a joint return if both spouses are eligible).

 

Both the Social Security and retired government employee benefits are one-shot deals for 2009. The regular Making Work Pay credit is good for 2009 and 2010.

 

But you’ve got to file the new Schedule M.

 

Related reading:

 

VIDEO ON MSN MONEY

11Comments
Jan 4, 2011 10:25AM
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Buptkis? I made too much money and for the schedule M got gornisht.
Dec 4, 2010 12:47PM
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In my past experience, the IRS has ALWAYS been wrong. Yesterday I received an IRS letter requesting that I pay back the $500 (joint-return) refund THEY said I qualified for back in February. Now they tell me it was their mistake, but they want the money back. Just in time for Christmas!

 

I received $250 from Social Security, but my wife did not--she is younger than me.

 

Is this government incompetence or a government scam?

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