Posts Tagged ‘Making Work Pay Tax Credit’

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The American Recovery and Reinvestment Act (ARRA) of 2009

Friday, January 21st, 2011

This post is providing factual information from the Internal Revenue Service regarding the tax benefits for individuals and businesses through the provisions of “The American Recovery and Reinvestment Act (ARRA) of 2009”.  Although the law was signed by President Obama on February 17, 2009 there are still tax benefits available for tax year 2010.  There are two major sections for this post: 1) the “Making Work Pay Credit”, and 2) the other seventeen major tax benefit areas. 

“The bill is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn. The bill includes federal tax cuts, expansion of unemployment benefits and other social provisions, including domestic spending in education, health care, and infrastructure, including the energy sector.” (IRS website)

  • The “Making Work Pay Credit” (please note that this is a “refundable” tax credit) 

Many working taxpayers are eligible for the Making Work Pay Tax Credit in 2010. The credit is based on earned income and is claimed on your 2010 tax return when you file your taxes in 2011.

Here are five things the IRS wants you to know about this tax credit to ensure you receive the entire amount for which you are eligible.

  1. The Making Work Pay Credit provides a refundable tax credit of up to $400 for individuals and up to $800 for married taxpayers filing joint returns.
  2. Most workers received the benefit of the Making Work Pay Credit through larger paychecks, reflecting reduced federal income tax withholding during 2010.
  3. Taxpayers who file Form 1040 or 1040A will use Schedule M to figure the Making Work Pay Tax Credit. Completing Schedule M will help taxpayers determine whether they have already received the full credit in their paycheck or are due more money as a result of the credit.
  4. Taxpayers who file Form 1040-EZ should use the worksheet for Line 8 on the back of the 1040-EZ to figure their Making Work Pay Credit.
  5. You cannot take the credit if your modified adjusted gross income is $95,000 for individuals or $190,000 if married filing jointly or more, you can be claimed as a dependent on someone else return, you do not have a valid social security number or you are a nonresident alien.

Visit http://www.irs.gov/recovery for more information about the Making Work Pay Credit. 
  
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The 2009 “Making Work Pay” Tax Credit

Thursday, March 18th, 2010

The Federal government has been endeavoring to stimulate the economy for the past several years.  There is a new (income) tax credit that is available to taxpayers when they file their 2009 Federal tax return.  It is obtained by completing Schedule M and submitting it with your  tax return.  USA Today recently reported that if you do not complete this schedule the Internal Revenue Service will review your return and determine your eligibility.  However, the processing of your tax return (and possible refund) will be delayed by two to three weeks. 

The Making Work Pay tax credit is a new credit worth up to $400 for individuals and $800 for married couples that was established by the American Recovery and Reinvestment Act of 2009. Millions of hardworking Americans have already received the benefit of this credit every pay period through reduced tax withholding.

Some beneficiaries of Social Security, Veterans and Railroad Retirement programs, may have also received a $250 one-time Economic Recovery Payment in 2009. Early tax filing trends indicate that some working taxpayers who received the Economic Recovery Payment, and are also eligible for the Making Work Pay tax credit are slowing down their tax refunds by not properly reporting the $250 payment on their tax returns. Anyone who received the one-time Economic Recovery Payment must reduce the Making Work Pay credit they claim by the amount of the one-time payment.

To find out if you received a 2009 Economic Recovery Payment, please call our automated telephone service at 1-866-234-2942 and select Option 1. Starting March 23, 2010, use the Did I Receive a 2009 Economic Recovery Payment? online tool to verify whether you received the payment.

You can be sure to properly account for the Economic Recovery Payment by properly reporting it on IRS Schedule M when you claim the Making Work Pay tax credit.  If you received a one-time payment, but do not report it on your return, it will slow your refund. For more information see the instructions to Schedule M.

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