Note from Taxgirl: I’ve written a few pieces about the credit since this piece originally posted. Many of the questions and comments related to this post can be answered by checking out this updated post about sorting out the credit. You can find out more about calculating the credit here.

As of April 1, many taxpayers will see an extra few dollars in their paychecks as a result of the Making Work Pay Credit. The MWPR was part of the American Recovery and Reinvestment Act of 2009, signed into law by President Obama in February 2009. The credit will provide up to $400 per individual worker and $800 per working married couple.

The credit will be administered through cuts in withholding at the employer level. The credit will phase out for individual taxpayers with AGI in excess of $75,000 (up to $95,000) or $150,000 for married couples filing jointly (up to $195,000). If you are a higher-income taxpayer, you will see little or no change in your pay.

The amount of the credit that you receive will be reported on your 2009 income tax return, which is filed in 2010, but it is not taxable and you do not have to pay it back if you received the proper amount. If you do not have taxes withheld by an employer during the year because you are self-employed or because your withholding level is too low for the credit to apply, you can claim the credit on your 2009 tax return (filed in 2010). This is a refundable credit, so if you qualify and you do not receive the entire amount, you can have any additional credit refunded to you at tax time (again, in 2010).

The changes will be made automatically through your withholding so you will not need to make an adjustment to your form W-4 come tax time for most taxpayers.

There are, however, potential problems for some taxpayers. It is possible that there could be an “over withholding” for some taxpayers. Chief among them: college students and others who may be claimed as a dependent on someone else’s return. If you are claimed as a dependent on someone else’s return, you do not qualify for the Making Work Pay Credit. This means that those taxpayers will have to return any credit paid out to them (either in the form of payment to IRS or a reduced refund, if you normally qualify for a refund) unless an adjustment is made on a form W-4.

Additionally, married taxpayers who both work should carefully review withholding. If each spouse’s employer makes the adjustment, an “over withholding” could apply, especially in cases where combined income hits a phase-out amount or if withholding from one spouse runs all of the way up the bracket (the same situation applies to taxpayers who work more than one jobs). Remember, your employer is merely reading from a tax table: he or she is not aware of your spouse’s income (or lack of) or your other employment. If you know that your combined incomes are over the phase-out limits, or that your income may run up the bracket as a married taxpayer or due to holding more than one job, you should make accommodations now (either in the form of adjustments or setting money aside) so that you don’t get caught by surprise next April.

It’s also important to remember that if you do not work, you are not eligible for the credit. Retirees and the disabled are set to receive a $250 check sometime in late spring/early summer but there will be no checks for taxpayers who do not work and do not qualify as a retiree or disabled person. Keep in mind, too, that the number of children that you have will not affect your credit this year: I’ve been fielding questions from taxpayers who believed that the provisions from the last stimulus bill (in 2008) would apply for this year. They do not. Claiming additional dependents on your 2009 tax return (filed in 2010) will not increase your Making Work Pay credit.

The bottom line is that if any special circumstances apply to you, be aware of how much is being withheld from your check. Do the math if you’re worried. Assuming that you’re not phased out, to receive $400 over (roughly) the next nine months, an individual taxpayer should receive about $11 extra per week. Similarly, assuming that you’re married and not phased out, you and your spouse should receive twice that amount combined ($22/week). If you find that your withholding is more than it should be – and you’re concerned – make an adjustment on your form W-4 or talk to your tax professional.

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Kelly Erb is a tax attorney, tax writer and podcaster.

Comments

  1. Kelly,

    You’ve done a great job of explaining this. Hopefully this will help more folks understand that the payroll tax withholding tables are NOT (and to the best of my knowledge never have been) set up to ensure that the FIT withheld from their checks will approximate their liability for any particular tax year.

    I’ve been trying to explain this to clients for decades! Thanks for the assist.

    Sheryl

  2. Hi Taxgirl,

    Just so i understand, there’s no way for me to get my hands on the $800 (in my case) in one payment this year? It sounds like my employer will be maing the appropriate adjustment? But i don’t really get that. I read somewhere that “This tax credit will be calculated at a rate of 6.2% of earned income”. Not sure what that means. If I have set my W4 so that a certain amount is withheld, my emplyer is going to manually go in there and make sure a little less is withheld? How many months of adjustments to my paycheck will it take for me to get the full $800? thanks so much

    • If your employer uses a paper table, he or she will just check the updated tables.
      If your employer uses a payroll system or software, he or she won’t have to do anything – those adjustments will be automatic.
      You can’t really “opt out” of the increased withholding but if you wanted to make an adjustment, you can tweak your form W-4.

  3. My husband and I both currently file as married zero. Iv’e been told one of us should change to single zero. Should I do this? Or, can I remain as married zero and have extra taken out of my federal tax withholding?

    • Without knowing more, I’d suggest remaining as married and having additional money taken out – you can do that by just writing it on the form W-4.

    • Without knowing more, I’d say keep your status as married and have additional $ taken out. You can write the amount that you want withheld on your W-4.

  4. Concerning the Making Work Pay Credit, will it function like the stimulus payments of yore where if I acknowledged receipt a stimulus payment on my TurboTax software this year, my tax liability went up by that exact amount and if I unchecked the box, it went down?

    Second question: How can I calculate my withholding so I come as close to paying zero taxes next year and receiving little to no refund either? My goal is to pay exactly what I owe, no more no less – to realize as much income per check as possible.

    Thank you.

  5. Huh. My gross is less than $75k, and my AGI is certainly much less (student loan deduction and all). I’m single and claim 5 exemptions… but my biweekly check today has $25 more withheld for fed taxes. An extra $50 a month I get to pay now.

    I’m so happy that I’m rich. I never knew. I also never knew that more than $250,000 a year equaled less than $75,000 a year. I’m an extremely liberal Democrat, but I hate Barack right now. This Making Work Pay credit is a damnable lie.

  6. So this “credit” will alter the amount I get back during tax time 2010, correct? There isn’t any new tax law where I won’t be held accountable for this money (unlike last years stimulus that didn’t affect my tax return)? I mean, if I’m paying less, I suppose I’ll get less in return. I just want to make sure I’ve got this straight before I alter my W-4.

    • The credit is fixed according to your filing status and income (up to $400 per individual worker and $800 per working married couple). If your adjusted withholding equals the credit, you’re good. If you get more than you should, you will have to give back the overpayment. If you get less than you should, the credit is refundable, so you can collect the difference come tax time next year.

  7. Hate to sound so thick headed but is this for 2009 only or is it applicable yearly for a specified amount of years? (Honestly I would prefer a lump sum check from Uncle Sam, and I bet my employer would too.)

    Thanks in advance,
    Ruthie

  8. MDillenbeck Reply

    If I understand correctly, both of my wife’s job and my job (my second job is “student”) will all take out about $22/week thus causing an overpayment of $1600 and taking our refund level tax return dangerously close to owing more than $1000? (If I remember correctly, the government charges a penalty if your liability exceeds $1000).

    *sigh* My wife and I already had to increase withholdings by $10/check state and $20/check federal – and now it looks like we’ll have to up the federal to more like $50/check to balance out our overpayment.

    To be honest, the fact that our government approved of having the employer take out the tax credit shows how clueless our government is about the working class. Almost everyone I know who is married has both spouses working, and I am sure they are not going to realize that they each will have $22/week taken out and end up owing an additional $800 for overpayment! (Again, on the assumption that I understood this correctly.)

    • No, it’s not quite that black and white. The real issue is your withholding. The tables assume that you’re both claiming appropriate exemptions. And the MWP credit should work out so that each of you receives an amount that together would equal the married taxpayers credit ($800, which is 2x the amount for individuals). So, for most folks, it should work out okay. The problem for married taxpayers will happen when either your combined incomes will result in a phaseout (starting at $150,000) or if one of you has income (esp if one of you works two jobs) and/or exemption amounts that result in an overpayment when combined with your spouse. For most middle class taxpayers, this should not be a problem. Check your pay stubs before you panic. You might be okay.

  9. Kimberley G Reply

    Thanks for the explanation.
    I couldn’t quite wrap my head around this issue until I ready your description.
    Great job, thanks!

    Kimberley

    Gig Harbor, Washington

  10. Alien Worker Reply

    Hi,

    I am having SSN and my wife has only ITIN no and we file jointly;Our income doesnt cross $150K.do u think we qualify for the Making work pay credit?

    Alien Worker
    NY

  11. Excellent explanation of the tax implications of this credit. I also read that President Obama is extending this credit till 2013, using his budget to fund the credit. Any update on this?

  12. Hello,
    I’m paid on a monthly basis and currently file 3 for state (Iowa) and 3 for federal. I have not seen any decrease in taxes being taken out of my paycheck. Is this due to the fact that I have three deductions for state and federal already? Any advice that can be offered would be greatly appreciated!

    Thanks,

    Matt

  13. I forgot to add that my income per year is $46,000 and I am filing single. Hopefully that will better help you answer my question.

    Thanks! 🙂

  14. Hello I am collecting a state government pension after 27 years in law enforcement. I am 49 years old. Recently on 01 April 09 I saw my federal withholding decrease by 60 something dollars or so per month. I assume that means I am getting the 800 bucks. I am married however neither of us have anymore wages, income, taxes, etc. The only income we have comes in a 10-99R.

    I am correct in that I am going to owe all of this back come tax time next year because it is a pension. My pension sent out a letter at that time saying basically the government forced us to do this but you better do a new w-4 or you are going to owe a lot of taxes at the end of the year. Is this correct?

    Thanks

  15. I just changed my W4 to be on the safe side. My filing status is MFJ. My understanding after reading the other posts regarding the MWPC, if I changed my W4 to withhold more taxes and I’ve always received refunds, this tax credit should not affect when filing my 2009 return. Am I right?

    Thank you!

  16. How can I know if I can get the stimulus in my tax refund? My paychecks did have a reduction in tax begining last spring, but it doesn’t show how much the total of that was on my W-2.

  17. Hi,
    I know my employer did change the tax witholding in April. I got a few extra bucks in my check at that time and have continued to since then. My question is: Do I claim the credit on my tax return or do nothing with that box? I did the worksheet and it said to put 800.00 in the box for the credit (married filing jointly) Should I do this even though both myself and my husbands checks were a few bucks more since the credit was established?

  18. Kimberly,
    Yes, you are supposed to claim the $800 tax credit on your tax form. That’s the whole idea of the tax reduction. If you didn’t then the reduction in withholding would be given right back to the IRS. Your taxes will be reduced by $800 to compensate for the reduction withholding. They reduced the withholding so you would spend it immediately in an attempt to get the economy going instead of letting you have the entire $800 back when you filed your return. I hope this helps.

  19. I just did my taxes yesterday using H&R Block software and found out about this for the first time. Now, I pretty much understand the whole thing, but there’s one small piece that I am just downright clueless about:

    So, I *should* have received more in my paycheck in 09 due to less taxes being withheld.

    Now I do my tax return, the H&R Block software ‘calculates’ my return, and tells me to claim $400 tax credit for the Making Pay Work credit, which in turn made my refund amount HIGHER? Is this right? So I paid less taxes AND I get even MORE of a return?

    I work for a rather large healthcare system, and can’t imagine they use paper tables for the thousands of employees they have… but is it possible that not every employer made the change, regardless of what tables they use and resulting in some of us getting the full $400 back on our returns?

  20. This explains the new credit much much better than the IRS does!! But I still have one question: HOW do you take the credit. Looking at my 1040A and the Schedule M form, it’s very confusing and I’m totally perplexed on what I’m supposed to write in the box. After doing the worksheet that goes along with Schedule M, I wound up with over $10,000. That can’t possibly be right. Help???

  21. I am trying to figure out how to do this making work pay, my husband is the only one working so do i just fill out for the $400and not the $800 credit?

  22. I was having the same questions after I did my Turbo Tax and it gave me the $400 credit . I felt like I was double dipping. I think Ive got it now. When your employer reduced the amount withheld from your check back in the spring, it increased your take home pay by a little each check . The amount withheld was changed at that time , not the tax you owe. If you dont take the credit on your 1040 Form, the amount of tax you owe would remain the same and since your employer reduced what they withheld, your refund will be $400 lower (or if you owe , $400 higher), esentially giving back to the government what you were getting little by little through the year. In a nutshell the 2009 IRS tax table dont take into account the $400/$800 stimulus, you have to deduct it in your tax credit section on the 1040 .

  23. Great Article!

    I have a question: Will my W-2 state how much of the credit I have been given? I had 2 jobs during the ’09 year and I am afraid that I may have been given too much of a credit. How will I know? Thank you.

  24. A followup to my question. I have not received either of my W-2’s yet, but it looks like since my income is less than $13,00 for the two jobs, that I will still get the $400 credit, even if my employer has reduced my federal tax. Is this correct? Thank you.

  25. I I M THE ONE WHO WORKED AND MY WIFE DID NOT WORK ARE WE ENTITLED TO 400 OR 800 FRO SCHEDULE M

  26. Thank you David. Assuming you’re correct, you explained it better than any of the other dozens of sites I’ve read.

  27. At the end of 2009, I changed jobs. My boss was childish and was angry with me that I left, I have reason to believe that he was toying with my taxes, not to mention the fact that he illegally underpaid his workers for months after minimum wage went up. Just got my W2 from him and I compared it to last year’s which there was a $300+ difference in my federal. Going by these calculations (that were slashed out before reprinting) I will owe BOTH federal and state money, which I have been working for 7 years now and never have had to do. Can someone please explain?

  28. In response to Jessica and Bev, I have also been frustrated trying to figure out why HR Block’s At Home software was giving my husband and I the $800 credit even though his federal tax withholding has decreased on all of his paychecks since March 2009. At first glance, it does seem like we would be getting the stimulus twice. While I am not a tax professional, nor am I sure that my input is technically correct, I now think I understand what is going on with the “Making Work Pay” stimulus enough to answer the question. If someone finds that I am incorrect, please help all of us by sharing the necessary clarifications.

    I am best able to understand and explain it with an example (using overly-simplistic numbers for illustration purposes only): For example, if your taxable income for the year is $100,000, and your federal tax liability is 25% as calculated by the IRS federal income tax tables, you are liable for $25,000 in federal taxes that year. Of course, most employees who receive payroll checks automatically make payments towards their federal taxes via the federal tax withholding on each paycheck. The amount of withholding on a paycheck is largely determined by: 1) the # of “allowances” the employee requested on the W-4 they submitted to their employer, and 2) the IRS’s W-4 withholding tables, which determine how much federal tax will be withheld on an employee’s paycheck. It is important to note that the W-4 withholding tables are NOT the same thing as the federal income tax tables. The “Making Work Pay” stimulus, which started around March 2009, did NOT change the federal income tax tables; it only changed the W-4 withholding tables (and according to my husband’s payroll rep, the change is not set to end at any known time). This means that, in the example above, you STILL owe $25,000 in federal taxes for the year, but ever since the W-4 withholding tables were revised in early 2009, less federal tax has been withheld from your paychecks. Continuing the example, if before the W-4 withholding tables were revised, you claimed 1 “allowance” on your W-4 and were accustomed to having $25,000 withheld for you in your paychecks throughout the year, you would owe $0 at the end of the year, right? Now, with the revised W-4 withholding tables, you are still claiming only 1 “allowance” on your W-4, but only $24,000 was withheld for you in your paychecks in 2009, and now you unexpectedly owe $1,000 on your 2009 tax return (remember, your tax liability for the year is still $25,000). That’s not what I call a stimulus. This is especially alarming if this caused you to inadvertently under-withhold and now you owe the penalty fee for under-payment. Fortunately the stimulus includes a $400 CREDIT (or $800 for “married filing jointly”) which is given to you on the Schedule M form of your 2009 federal tax return. After you apply the credit on Schedule M, your $25,000 federal tax liability is reduced to $24,600 (or $24,200 if “married filing jointly”). In the example above, you already paid $24,000 of it through paycheck withholdings in 2009, and now instead of owing an additional $1,000 at the end of the year, you only owe an additional $600 (or $200 if “married filing jointly”).

    In summary, the “Making Work Pay” stimulus does not change your income tax bracket; if it used to be 25% before the stimulus started around March 2009, it is very likely still 25% (barring any other changes to your tax situation). The “Making Work Pay” stimulus only changed the W-4 withholding tables, adjusting how much is withheld for you on your paychecks, but NOT reducing your total tax liability due for the year. Fortunately, the $400 CREDIT (or $800 for “married filing jointly”) DOES reduce your actual tax liability for 2009 via the Schedule M form on your 2009 tax return.

    Whew!

  29. jame vanderpool Reply

    I’m not sure if my withholdings were lower or not. Should I go ahead a
    claim the 400.00 credit when I file my 2009 tax return. If i claim
    the $400.00 in error, will the IRS send me a bill for $400.00?

  30. I am retired, and on Social Security only.
    My wife works as a retail clerk at a big-named store.
    When doing my Turbo Tax, (we filed jointly of course)
    I had a refund of approx. $2,200.00.
    As soon as I stated that I had received a stimulus of $250.00 given to me by the Government, my amount of refund was reduced by $250.00.
    Why did the Government give me something on one hand, and then take it back with the other hand?
    This is confusing to say the least.
    My Wife did not make over $30,000.00, so why the reduction from our refund?

  31. President Obama and the democrats hava stuck it to me again. I just finished my tax return for 2009. Thanks to the Work For Pay Tax Credit that was snuck in the 2009 American Recovery Act (stimulus bill) instead of a small tax refund or owing a small amout this year I’m stuck with a $1500.00 balance due that includes an underpayment penalty! My witholding was cut by 40.0%! Any businesses that hoped for large purchases from me this year can forget it. I have been budgeting for a new refrigerator and dishwasher to replace 20+ year old models. Had planned on spending $2000.00 to $2500.00 on replacements but now that I have to pay a tax bill that was not planned for these purchases will have to wait. So much for economic recovery.

    • Wm – be sure and double check your figures (and make sure that you completed Schedule M). The likelihood of a $1500 underpayment completely attributable to the Making Work Pay Credit is phenomenally small. To do that, you and your working spouse would both have to have the entire amount taken out of both paychecks at a MFJ rate AND you would have to be completely phased out (meaning income over $195,000).
      In the unlikely event that it did happen that way, there is relief for the underpayment penalty. Check this post: http://www.taxgirl.com/making-sense-of-the-making-work-pay-credit/

  32. Jame, Your withholding (or lack of) doesn’t affect your eligibility for the credit. Go ahead and fill out the Schedule.

  33. L. Gordon,

    Here’s what probably happened: your wife’s income qualified you for the entire Making Work Pay Credit which boosted your refund. However, you have to deduct any Economic Recovery Payment from the credit – it was part of the same bill and the intention was to benefit those who didn’t qualify for the Making Work Pay Credit. Since your wife made it possible for you to qualify, you can’t “double dip” – the government isn’t taking anything that you were entitled to away, they’re just making an adjustment for something that you already received.

  34. Kristen,
    The difference in withholding should work out once you complete Schedule M. Run it again.
    The withholding adjustment should not have affected your state taxes at all.

  35. Steve, you haven’t received any credit yet – just a withholding adjustment. You still need to file with your Schedule M to get the credit.

  36. I had posted this last year and never got a response and notice now this thread is heating up again with most people getting some answers. So I thought I would try again.

    I am 50 years old and retired with a state government pension. My wife doesn’t work. All of our income is shown on a 10-99R and is retirement pension payments. My pension sent out a letter last March telling us basically that the government was making them change withholdings because of this new law but that more than likely you would owe the money back at tax time and you should do a new w-4. Am I reading correctly that Pension income does not qualify for this and that I will owe all of the money back? So do I do this form M? Do I say that I did or did not get this 800 credit although it appears that my withholdings changed by about 66 or 67 dollars a month which would amount to 800 a year. Can someone advise on my situation. I had to fight with the Turbo Tax program last while doing nonresident state forms. It was a nightmare. I hope Turbo Tax is more knowledgeable this year when I start doing my taxes.

    Thanks,
    Sammy

    • Hi Sammy,
      I must have missed this before – sorry!
      Pensioners will not qualify for the Making Work Pay Credit unless you also receive earned income. Retirees should have received a $250 payment during the year directly from Social Security, Railroad Benefits, or the VA. However, my guess is that you’re not collecting Social Security because of your age so you wouldn’t have received the $250.
      The letter that you’re referring to likely advised you to adjust your withholding on a form W-4P (for pensions). This is because the tables reduced withholding from all taxpayers – the tables don’t know what your individual circumstances are or how you’re receiving your income. To avoid having too much withheld, you needed to make an adjustment. If you didn’t, the answer is yes, you probably have to pay in more at tax time because you had more withheld during the year.

  37. Thanks Kelly so much for your quick response. Can I ask if when Turbo Tax asks me if I received the 800 credit should I say no or yes and will I do this Schedule M or no.

    And you are right, did not get the 250.

    Thanks for your help.
    Sammy

  38. It doesn’t sound like you qualify for the credit but if TurboTax allows you to complete a Schedule M, why not? If you don’t have qualifying income, it should kick you out and not give you the credit. I would run the numbers and see – especially since I’m not exactly sure what your other income is.

  39. I have been told that since my wife and I each received the $250 (we are both on social security but still work) that the work to pay credit is wiped out . We no owe and additional $500 in taxes. Shouldn’t the $500 stimulus checks be offset against the $800 work to pay credit with $300 as additional income to be taxed?

    • Jack, Assuming you’re otherwise eligible, you are correct. You should receive the credit less the extra money from SS.

  40. Mary Antoniette Reply

    My Federal Withholdings have “increased” by $ 10. per month. I make
    $ 33,000. per year and my husband makes about the same. I don’t understand why I am having this tax increase. My Payroll Administrator said it is because of the Making Work Pay Program. So then ” I ” am paying for this program to allow others to get tax credits? Is that correct?

  41. My brother files a 1040-EZ and he did not realize about the making work pay credit. He has already mailed it off. Can an amend to the form utilize the credit of $400.00 for single person? What form should he file?
    Thank you,
    Lyn

  42. I filed 1040A and was surprised I got $400 extra back. I got the letter today saying that I was elible for this credit. I think the IRS and citizentaxfree.com did a poor job of getting this information out to us less clued in tax papers. It worked out in the end so I’m not going to compain too much 🙂

  43. Lyn, I file the same and did not ask for the credit. The IRS sent me a notice stating that I qualified and they have automatically adjusted my return for me to include the $400. Your brother should be getting the same soon.

  44. This credit is ultimately a red herring that’s been deeply embedded into the ARRA with fine print and tight-lipped IRS personnel. Yes, it’s technically a tax credit, but the truth is that most of the people who qualify for it were additionally taxed. It’s almost the same as someone stealing your wallet and giving you back 20 bucks. An optical illusion; nothing more. This is assuming you even know about the credit to begin with, which makes it an even bigger windfall for the government. And if you do qualify and take the credit, beware next year…

  45. Michael is correct, if this is like any of the other stimulus tax credits we received in the last 10 years it’s really an advanced on next years tax return.

  46. I too found I got an extra $400 back in my refund today, but haven’t gotten the notice from IRS yet. I was under the impression that I got my $400 spread out through last year in my pay, because it went up a couple of dollars. But now I am getting this refund…is this extra $400 for 2010 MWPR or did they goof and give me the $400 twice? I certainly don’t want to mess with the IRS!

    Did anyone else see the same thing with their refund?

  47. Last week I received my tax refund, but I didnt open it until today. ( i planned on depositing it in a new bank account) I opened it today because I received a letter from irs saying there was an error on my form 1040. I received an extra $400 in my refund. How did I qualify?

  48. I had never heard about this credit till I did my taxes and discovered that I am $8000.00 in debt with the IRS. I CALL THIS VIOLATION OF MY CIVIL RIGHTS.

    • Guadalupe, there is no way that you could be in debt by that amount simply as a result of the credit. You may want to consult with a tax professional.

  49. i recieved a letter in the mail about the refund….a day later i got my refund check….but it was what i expected in the first place….nothing added..will i be recieving another check…?..also my dad got his refund check…and a few days later he recieved the letter so should he also be expecting another check?

  50. I am using TaxAct. I don’t have an income, but my husband does and we have a business that is under his name. I just got to the questions about the MWP credit and after answering, it showed us getting $800. But I have read in a couple places – “if you don’t work, you don’t get this credit”, so how would it have input that I get it, if there is nowhere on TaxAct that I have income? Do we get the $800, just because we are filing jointly, even if I don’t work?

    Don’t get it…..
    Thanks

    • Dawn, the credit is by filing status. If one of you qualify, you’ll get the credit.

  51. I was unemployed in 2009, but I did some odd jobs to earn about $50

    Can I use that to get the credit?

    If not, what is the minimum you have to make as self employed to get the credit?

    • Rick, it depends on a number of things, including your other income (you have to enter your AGI to completely figure the credit), but my sense from running the numbers is that you might be able to get about $3 or so. Maybe. You could try running the numbers on the Schedule M.

  52. I adjusted my W-4 in Jan ’09 just to have the stimulus plan adjust my withholding back. As it turned out, I was not eligible for the tax credit either. So I got smacked with a $4,200 tax owed situation. I got to pay stimulus this year.

  53. As a retired military, with this being my only source of income, do I qualify to claim the 250 dollar credit on schedule M. I filed jointly and my wife claimed a 250 dollar payment which she receieved through social security which was documented on schedule M. I am just not sure as a Retired Military member receiving Military retirement check each month if that qualifies as one of the certain Government Retirees as explained on instruction section for Schedule M. Hopefully my question makes sense and you can help me with this. Thank you very much.

  54. I was a graduate student/research fellow in 2009, and my salary was paid in the form of a stipend (fellowship). My institution does not withhold taxes, but I am required to file quarterly tax estimates. The entire is fellowship is legally taxable as it is salary paid for research activities I perform (not for tuition or courses). Would I qualify for the Making Work Pay Credit? Are my daily workings in the laboratory not considered work in this case?

    • Carl, so long as you had earned income (and it sounds as you do) and otherwise qualify, you should be able to claim the credit. Try completing a Schedule M.

    • Carl, so long as you had earned income (and it sounds as you do) and otherwise qualify, you should be able to claim the credit. Try completing a Schedule M.

  55. Does the Federal “Making Work Pay” tax credit have any effect on state income tax returns? Are you aware of any states that are providing same or similar tax credits at the state level?

    Bill

  56. Kelly,

    Received my federal return which was considerably more than expected. Their explanation was this ‘making work pay’ credit. I have not sat down to look at my return yet but i wonder what affect this will have on my state returns and will I have to file amended returns based on my AGI?

    Thanks

    • John, dunno what state you’re in but the Making Work Pay Credit does not affect your AGI (and should not affect your state taxes). It’s just a credit to offset tax due – the difference is a refund to you.

  57. David Ireland Reply

    We just recieved a $4000.00 from the i.r.s, we were expecting $900.00. We didnt fill anything in for the making work pay program, so we refigured out the tax money owed to us is 900.00, Our over all income is 17,000.00. How can this be possible 4o00.00. How could the i.r.s came up with this amount? We made 9000.00 in our business. The other income was paid by the county and they took taxs out.

    Any ideas?

    David

  58. My daughter received a refund from the Making work Pay credit and being her father and claiming her as a dependent I told her she was not eligible for the credit. I tried t talk to the IRS and ask them where to send the check back. They wouldn’t even tell me because I was not my daughter. They wanted a third party conversation with her to tell her where to send it to. All I wanted was an address and they wouldn’t even do that. My daughter does not like to talk to anyone on the phone so I thought I would help her out….What a mistake I made…my blood pressure is s high now I think I am going to faint. All I wanted was an address and they wouldnt even tell me. ..I’m her father…claimed her as a dependent on my tax return..could have proven that without a doubt and they still wouldn’t tell me…I have never been so frustrated in my life.. How did the IRS miss the fact that I claimed her as a dependent and still sent her the check I don’t know. Would you have any idea what the address is.? I barely see my daughter and I am trying to help her out…. Scott Shattuck

  59. Like Scott’s daughter, I just received an IRS check for a bit over $400 (interest was included) even though my ONLY income in 2009 was a taxable fellowship grant (i.e., not “earned income”); thus, I am *not* eligible for the Making Work Pay credit, correct?

    I can’t believe that I am now supposed to spend my time and energy figuring out where or how to return the check because the government has been overzealous in correcting for people who forgot to file Schedule M. (I admit that I didn’t file it, but I did that because I thought I didn’t need to since I wasn’t eligible…in the future I suppose I will always file for things like this even if I don’t qualify, just to avoid these kinds of stupid IRS mistakes.)

  60. carlo spada Reply

    I received the work pay credit in 2009 which to amounted $12. In Jan 2010 my paycheck was reduced by about the same amount. I called my payroll department and they advised that it was the Obama simulus that expired in 2009. I’m reading that the work pay credit is going to expired in 2010? Is the gov’t going to deduct an additioanl $12? I’m not taking about the Bush tax cuts.

  61. Question – my husband and I filed married – joint last year and received the $800 credit – this year on Form M – it asks how much we received. Am I to write $800? I’m confused because in paranthesis it states not to write more than $500… but we received $800….?… confused!

  62. I use “taxact” to calculate for me, it automatically entered 800.00 since my husband and I are filing jointly. My husband had a job in 2010 but I did Not work the entire year, if we file jointly should it be entered as 800.00 since my husband worked and I didn’t, but we are filing jointly. The taxact program usually corrects entries so I am assuming this is a correct entry. thanks

  63. Farmer Tiger Reply

    Is “Work Pay Credit” taxable?
    I mean: should I report the “Work Pay Credit” of 2009 as taxable credit on Line 10 of 2010?
    Thanks a lot.

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