Ask The Taxgirl: Qualifying Wages For Making Work Pay Credit
Taxpayer asks:
My daughter only made $3,900.00 this year, then was laid off… She only worked for one employer.. so is she illegible for the Work Pay Credit… it comes to about $252.00 which would help her out considerably, because she is only getting back $116.57. She is in her thirties with no dependents.
Taxgirl says:
You don’t have to work full time for the entire year to qualify for the credit. However, if you’re under the income threshold (which your daughter is), you will only receive a portion of the credit.
Your math looks right to me on the credit (I got a little less but then I’m assuming you used round numbers in your post). Your daughter will need to file a Schedule M to see if she actually qualifies but it looks like the answer is yes.
Quick caveat: she won’t qualify if you claim her as a dependent on your return. I’m not sure how anyone could survive on $3900 for an entire year – so make sure that you consider other sources on income when looking at eligibility for the credit. You can find more information about calculating the credit here.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
I have a couple of questions.
Question #1: If the daughter files Form 1040EZ would she still need to file Schedule M?
Schedule M instructions (at the top of the form) indicate that you only need to attach it to Forms 1040A, 1040 or 1040NR.
Question #2: The daughter is not a qualifying child based on her age, but could she be a dependent qualifying relative?
It appears to me that because the daughter had gross income greater than $3,650, it makes her ineligible to be claimed as dependent qualifying relative in 2009.
Are my assumptions correct?
JD:
Your assumptions are correct. The daughter’s gross income exceeds the threshold for being a qualifying relative.
If a person’s only source of income for 2009 was their unemployment benefits, are they eligible to use the “Making Work Pay Credit”?
MM:
No. Unemployment benefits alone do not qualify you for the credit; you must have either wage income or earned income from other sources (such as self-employment income).
I’m helping my friend file her taxes. She was employed for the full year, at $28,449, and her husband was unemployed for the full year, unemployment benefits were $18,435. They are married, filing jointly. TurboTax wants to give them the full $800 credit. I’m just double checking because it doesn’t seem quite right.
thanks
Barb, that sounds right. They don’t both have to work to qualify for the full credit, just file as married with one qualifying worker.
Thank you Kelly, I couldn’t find any definitive answers. I thought that might be the case, just wanted to make sure.
Barb