Schedule M

Tuesday, 8 March 2011

Schedule MSchedule M: The 2010 Tax Credit Explained [VIDEO]

by Mary Phillips-Sandy

"M" may stand for "money."

Part of the 2009 stimulus package was President Barack Obama's Making Work Pay tax credit, or Schedule M, which adjusted federal withholding tables to increase take-home pay by up to $400 for working individuals and up to $800 for working married couples.

As the New York Times reported last year, this caused confusion for taxpayers, many of whom didn't know they had to complete a brand-new Schedule M IRS form in order to claim the credit on their returns. The situation got even messier for retirees who could claim the Making Work Pay credit, but only after deducting it from other federal tax credits.

Guess what? You may need to deal with Schedule M again for the 2010 tax year.

According to the IRS, the Making Work Pay credit and adjusted withholding tables remained in effect in 2010. The refundable credit was available for self-employed people, and was reduced for higher-income earners, starting at $75,000 for individuals and $150,000 for couples filing jointly.

In order to claim the credit, anyone who files a form 1040 or 1040A needs to complete and file a Schedule M form to calculate how the credit impacted their paychecks and tax liability. (A simplified worksheet is built in to the 1040EZ.)

One more twist, since life with the U.S. tax code is never simple: The 2009 stimulus included a $250 tax cut for retirees, which had to be accounted for via Schedule M. That was a one-time-only deal, so it's not an issue for 2010.

Here's an IRS insider explaining how the Making Work Pay credit, well, works:

Recovery: Making Work Pay - 2010

Courtesy : AOL News

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