Get Up To $800 With The Making Work Pay Credit

Many (or most) working taxpayers will be eligible to receive a special credit on their 2010 tax return, called the Making Work Pay Credit.  The IRS has recently produced their Tax Tip 2011-15 which explains five important provisions about the Making Work Pay Credit:

  1. The Making Work Pay Credit provides a refundable tax credit of up to $400 for individuals and up to $800 for married taxpayers filing joint returns.
  2. Most workers received the benefit of the Making Work Pay Credit through larger paychecks, reflecting reduced federal income tax withholding during 2010.
  3. Taxpayers who file Form 1040 or 1040A will use Schedule M to figure the Making Work Pay Tax Credit.  Completing Schedule M will help taxpayers determine whether they have already received the full credit in their paycheck or are due more money as a result of the credit.
  4. Taxpayers who file Form 1040-EZ should use the worksheet for Line 8 on the back of the 1040-EZ to figure their Making Work Pay Credit.
  5. You cannot take the credit if your modified adjusted gross income is $95,000 for individuals or $190,000 if married filing jointly or more, you can be claimed as a dependent on someone else’s return, you do not have a valid Social Security number or if you are a nonresident alien.

Be on the lookout for this important provision as you prepare your return for 2010.

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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3 Comments

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  • Hi, Lisa –

    This is probably due to the amount of income that your son earned. FICA (Social Security) is assessed on every dollar earned, while (depending upon how the W4 is filled out) there are personal exemptions, deductions, and credits allowed for income tax.

    If your son earned a relatively low amount, it’s possible that he will not have any income tax for the year while having to pay FICA on every dollar earned.

    If the amount of income isn’t the reason behind this, it’s also possible that the payroll folks made a mistake.

    Hope this helps –

    jb

  • I dont understand why on my sons w-2, theres more taken out for ss tax than federal tax. i always thought its supose to be just the opposite. Help!!!!

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