With tax time rolling along, I find there are a lot of questions surfacing about the Schedule M, or Making Work Pay Credit. This is a new credit for 2009 which allows for a $400 or $800 credit if you have earned income on a W-2. The Making Work Pay Credit can be claimed on Schedule M on your 1040 or 1040A tax return.
The credit is part of the American Recovery and Reinvestment Act of 2009, effective April 2009. It provides a maximum credit of up to $400 per single filers or $800 for working married couples. The credit is only available for individuals or couples that had earned income, which means they actually worked in 2009. Retirees and disabled will receive a $250 check but are not eligible for the Making Work Pay Credit, unless they received earned income in 2009. The form can be accessed on the IRS website at www.irs.gov/pub/irs-pdf/f1040sm.pdf.
The credit is 6.2% of your earned income and can be reduced if:
You're single and earned more than $75,000
You're married and have a combined income of more than $150,000
You are a government retiree and receive a credit
You received the $250 economic recovery payment for certain social security, SSI, railroad retirement, veteran's disability or pension benefits
Those individuals that received a pension and have questions should contact their plan administrator. A two page instruction sheet on completing the Schedule M can be obtained at www.irs.gov/pub/irs-pdf/i1040sm.pdf
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