I’ve been getting lots and lots of questions about the Making Work Pay Credit. To make it easier for you, here are the basics:
- The Making Work Pay Credit is only available for taxpayers with earned income during the year.
- The credit HAS NOT already been calculated as part of your withholding. Your eligibility for the credit does not change based on whether your employer did or did not correctly figure your adjustment.
- You may not claim the credit if you are a dependent on any other taxpayer’s return.
- The maximum credit allowable is $400 for individual taxpayers or $800 for married taxpayers.
- You must file a return to claim the credit.
- To claim the credit on a form 1040 or 1040A, you must complete a Schedule M. To figure the credit on a form 1040-EZ, you should complete the worksheet on the back of your tax return.
- If you received a $250 Economic Recovery Payment during the year, you must reduce your Making Work Pay Credit by the amount that you received.
For more information, including information about calculating the credit, I encourage you to check out these posts:
Ask the taxgirl: Help! I forgot to file Schedule M – what to do if you’ve already filed without the Schedule M, as well as what to do with a form 1040-EZ (that doesn’t have a Schedule M)
Making Sense of the Making Work Pay Credit – what it means for you and what to do if you owe an underpayment penalty due to the adjustment
Calculating the Making Work Pay Credit – how to calculate the credit on your form 1040, including step-by-step how to complete Schedule M
Are You Eligible for the Making Work Pay Credit – who is eligible (and not) for the credit, how much credit you can claim and why it might be reduced, written for AOL’s WalletPop
Making Work Pay Credit Could Surprise Some Taxpayers in 2010 – older post with information about adjustments to forms W-4 and why your refund might be less than expected.
This is the best most straight forward explanation of the Make Work Credit that I’ve ever seen. All of the “if this or if that” explanations only clouded the issue. Congratulations.
hi taxgirl
i’m finding this making work pay tax credit very confusing!!
I filed my 1040 federal tax return last week and also filled out a schedule M cause when I asked my book keeper if our company incorporated the “making work pay” tax credit, she had no idea what I was talking about.
So I presumed we did not get that incorporated into our paychecks, hence I wanted to claim it on my tax return. Anyhow, it turns out that we were getting an additional $5-10 per paycheck in 2009 which was the Making Work Pay being incorporated into our payroll. So now that I’ve already filed my federal tax return, do I need to amend it and pay the IRS the $400 back to them?
The other thing is, I did a rough estimate of how much extra I was receiving per paycheck and it seems to be about $386 – though not sure if I calculated correctly since I got a raise in the middle of 2009, so not sure how I should go about calculating this to see if I did get the full $400 tax credit.
Please let me know if I need to amend my return and send money back to the IRS.
Thank You.
ps – i am eligible for the $400 credit. one income, single filer, etc.
Is a joint filing couple entitled to $800 credit even though only on has earned income .. And that one received $250 credit via Social Security, and the other spouse receives a government retirement check? My tax software indicates we are due a credit of $800 less the $250 already received.
I had expected yhat the government retiree would receive only $250 and the working SS spouse $150 ( the $400 less $250 already received) gor a total of $400 additional credit.
Thanks
R Donovan, Based on what you’ve said, yes, a married couple who qualifies receives $800 even if only one person had earned income. The ERP offset would apply per person – so if there was only one check, then it’s $800 less $250.
Does the income max ($190,000 for joint filers) apply to the government retiree credit also or just the making work pay credit? Thanks. N
Tengo dudas en relacion al Incentivo creado por Presidente Barack Obama, correspondiente al a~o 2010, ya que el a~o pasado 2009 recibi $400.00
y este a~o me enviaron cheque por $31.32, donde tengo que verificar esto y que no sea aqui en PR o sea en Hacienda. Gracias.