Don't forget Schedule M

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Don't forget Schedule M

Postby EmergDoc » Mon Apr 12, 2010 9:51 pm

I was thrown for a loop this year by one of the tax credits, the one on line 63 of the 1040. The credit called "Making Work Pay and Government Retiree Credit" has an odd name. When I was originally doing my taxes, I skipped right over it because I'm not a government retiree, nor am I anywhere near the earned income credit area of the tax code, because I make a good income. I had mistakenly assumed any credit called "making work pay" must be aimed at trying to get people off welfare and into the work force. But that's the name for the stimulus passed out in 2009. I almost left $800 on the table by not filling out the mysterious Schedule M. Don't forget yours.

http://taxes.about.com/od/deductionscre ... rk_pay.htm
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Postby Beagler » Mon Apr 12, 2010 9:59 pm

"The credit is completely phased out for individuals making $95,000 or more, or $190,000 for joint filers. "
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Postby dbr » Mon Apr 12, 2010 10:07 pm

Turbo Tax made sure this got done, no questions asked.
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Postby NAVigator » Mon Apr 12, 2010 10:42 pm

dbr wrote:Turbo Tax made sure this got done, no questions asked.


I just discovered this about 30 minutes ago. In the case of H&R Block software, no questions asked - and no explanation given. I had to use Google to find out what this was.

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Postby retcaveman » Mon Apr 12, 2010 10:50 pm

I did not catch this when I did our intial draft, which I do manually, but Turbo Tax calculated it for us.

FWIW, I thought getting a paycheck is what made work pay.
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Postby pshonore » Mon Apr 12, 2010 10:55 pm

That's kind of odd because not putting in the right answer for the SS/VA/RR payment led to an automatic rejection for e-filers. Also question how many folks missed out on $250 by not answering the govt pension from earnngs not subject to SS question?
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Postby bettykayWAAZ » Mon Apr 12, 2010 10:55 pm

If you receive social security, you got $250 in the spring. It was sent to the same bank account that your social security is sent to. You must fill out schedule M and say that you got it or your taxes will be rejected. If you or your spouse worked then you will get $150 more. If there were no wages, then $250 is it.

Yes, pay attention to schedule M.
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Re: Don't forget Schedule M

Postby DA » Mon Apr 12, 2010 10:58 pm

EmergDoc wrote:I had mistakenly assumed any credit called "making work pay" must be aimed at trying to get people off welfare and into the work force.

I thought exactly the same thing when Turbo Tax told me I'm eligible for the credit. Must be a mistake.

Then I Googled it up and learned that Turbo Tax was right.
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Postby sscritic » Mon Apr 12, 2010 11:05 pm

Read the NY Times for the story of how many people aren't filing correctly:
While either of those procedures takes only a few minutes, I.R.S. officials said that the unfamiliarity with the process of claiming the credit had led to errors in more than four million of the 82 million returns processed as of this week.

http://www.nytimes.com/2010/04/10/your- ... 10tax.html

And speaking of laws with unintended consequences: Please don't take this a political comment aimed at any party or political philosophy, but apparently congress passed the new health care bill and lost their own health coverage. :)
It is often said that the new health care law will affect almost every American in some way. And, perhaps fittingly if unintentionally, no one may be more affected than members of Congress themselves.

“It is unclear whether members of Congress and Congressional staff who are currently participating in F.E.H.B.P. may be able to retain this coverage,” the research service said in an 8,100-word memorandum.

http://www.nytimes.com/2010/04/13/us/po ... ealth.html
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Postby pshonore » Mon Apr 12, 2010 11:09 pm

bettykayWAAZ wrote:If you receive social security, you got $250 in the spring. It was sent to the same bank account that your social security is sent to. You must fill out schedule M and say that you got it or your taxes will be rejected. If you or your spouse worked then you will get $150 more. If there were no wages, then $250 is it.

Yes, pay attention to schedule M.
A married couple would get up to $550 addt'l, depending on earned income.
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Postby Jack » Tue Apr 13, 2010 12:58 am

The Making Work Pay credit has reduced your normal withholding since April a year ago. The stimulus money has added a little bit to every paycheck since then. If you don't take the credit on your tax return it may appear that you have underpaid your taxes. I would hope that the IRS would make the correction on returns that miss this.
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Postby nisiprius » Tue Apr 13, 2010 6:43 am

Yikes! Thanks to the original poster and to this forum. I missed it.

Maybe I'm an idiot not to use a tax prep service after all. Or maybe I should have gone through that endless maddening "interview" in the H&R Block software instead of going straight to the forms as I always have.

Already them in, I'll sit back, relax, make sure I understand form M, make sure my wife didn't get $250--she doesn't think the did, make sure the IRS cashed my check, and then spend some quality time with a 1040X.
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Postby carolc » Tue Apr 13, 2010 7:20 am

Two people I know (myself included :D ) missed it. But the IRS caught it and changed our refunds accordingly. I understand they are checking returns for this particular item because many people who do tax returns the old fashioned way (by hand) are missing it.

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Thanks I missed it also!

Postby steelhorse » Tue Apr 13, 2010 7:22 am

Emerdoc thanks for the tip! Glad I held off writing the check! I'll correct my return tonight and be ready for the 15th!
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Postby pshonore » Tue Apr 13, 2010 7:28 am

Anyone can check at the following website to see if they got the $250 payment from SS/VA/RR.

http://www.irs.gov/individuals/article/ ... 14,00.html
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Postby AzRunner » Tue Apr 13, 2010 3:30 pm

nisiprius wrote:Yikes! Thanks to the original poster and to this forum. I missed it.

Maybe I'm an idiot not to use a tax prep service after all. Or maybe I should have gone through that endless maddening "interview" in the H&R Block software instead of going straight to the forms as I always have.

Already them in, I'll sit back, relax, make sure I understand form M, make sure my wife didn't get $250--she doesn't think the did, make sure the IRS cashed my check, and then spend some quality time with a 1040X.


I sounds like the IRS is set to correct returns that did not complete Schedule M, so you might wait a bit before filing an amended return.
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Postby Cherokee8215 » Tue Apr 13, 2010 3:48 pm

On my federal return, I owe about $600. But when I selected that I was elligible for the "Make Work Pay" credit in TurboTax, it didn't change the amount I owe by one cent. Am I missing something here? I was within the income limit.
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Re: Don't forget Schedule M

Postby YDNAL » Tue Apr 13, 2010 4:06 pm

EmergDoc wrote:I was thrown for a loop this year by one of the tax credits, the one on line 63 of the 1040. The credit called "Making Work Pay and Government Retiree Credit" has an odd name. When I was originally doing my taxes, I skipped right over it because I'm not a government retiree, nor am I anywhere near the earned income credit area of the tax code, because I make a good income.

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Postby durinsbane » Tue Apr 13, 2010 4:18 pm

Cherokee8215 wrote:On my federal return, I owe about $600. But when I selected that I was elligible for the "Make Work Pay" credit in TurboTax, it didn't change the amount I owe by one cent. Am I missing something here? I was within the income limit.


What happens if you select that you are not eligible? I think TT starts with the assumption that you will get it.
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Postby natureexplorer » Tue Apr 13, 2010 4:26 pm

dbr wrote:Turbo Tax made sure this got done, no questions asked.
Yep, with TurboTax (and I guess with most tax software), it all fills it out automatically. You might never even read the words "Making work pay ...".
I guess if you prefer to fill out the IRS forms manually yourself, check with TurboTax whether the bottom line is correct. You don't have to pay until you actually want to file and you don't have to.
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Postby natureexplorer » Tue Apr 13, 2010 4:27 pm

durinsbane wrote:
Cherokee8215 wrote:On my federal return, I owe about $600. But when I selected that I was elligible for the "Make Work Pay" credit in TurboTax, it didn't change the amount I owe by one cent. Am I missing something here? I was within the income limit.
What happens if you select that you are not eligible? I think TT starts with the assumption that you will get it.
I believe TT determines for you whether you are eligible or not.
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Postby Cherokee8215 » Tue Apr 13, 2010 4:29 pm

durinsbane wrote:What happens if you select that you are not eligible? I think TT starts with the assumption that you will get it.


It seems to assume that. I just tried to reverse it and it won't let me edit it. Oh well. I've had enough of work on my taxes today, and figure I've got things "close enough." If they don't agree, they'll let me know. I did have the reduced withholding in my pay.
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Postby hudson » Tue Apr 13, 2010 5:00 pm

dbr wrote:
"Turbo Tax made sure this got done, no questions asked. "

I used HR Block 2009. I did the interview and Form M was automatic.

You also get a tax break on property tax even if you don't itemize. You won't get this with HR Block 2009, unless you enter your property taxes. This was new in 2008.
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Postby pshonore » Tue Apr 13, 2010 6:50 pm

The MWP Credit for earned income is simple; its 6.2% of any earned income up to $400 Single/ $800 MFJ (subject to phaseout). The glitch is if you received the $250 SS/VA/RR payment, it reduces any MWP credit you receive from earned income. If you received a gov't pension for wages not subject to SS, you get $250 added to your refund but it also reduces any MWP credit from wages and/or the SS payment for an individual.
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Postby simplesimon » Tue Apr 13, 2010 6:59 pm

When this popped up when I was doing my return with TaxAct, I triple checked to make sure that I got it because it was something new that I never heard of before.

Kudos to EmergDoc for giving people the heads up and to TaxAct for including it.
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Postby hobbes » Tue Apr 13, 2010 8:24 pm

I made this mistake. Skipped right by it. Fortunately the IRS caught it and fixed it for me.
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Postby sscritic » Tue Apr 13, 2010 8:37 pm

simplesimon wrote:Kudos to EmergDoc for giving people the heads up and to TaxAct for including it.

While EmergDoc is a wonderful guy, where was everybody in January? Here are three separate threads:
Posted: Fri Jan 01, 2010 9:00 pm Post subject:

The making work pay credit is filed on schedule M. The instructions are to check "no" on line 1a if you are filing form 2555 for foreign income, then see instructions.

Posted: Fri Jan 22, 2010 8:18 am Post subject: Government Retiree Credit - Sched M
My tax year was sailing along until I reached Sched M and the Government Retiree Credit. I am trying to understand if I can take this credit. It reads -

Posted: Mon Jan 25, 2010 8:35 pm Post subject: Making work pay credit, schedule M question
I am using Taxact. I go through the questions and it adds $400 in Making work pay tax credit to my refund amount.

But I don't know if I received this already via reduced withholding during last year. How can I find out?

To find more boglehead.org threads on the "mysterious" Schedule M, use search:
http://www.google.com/search?q=schedule ... eheads.org
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Postby jsl11 » Tue Apr 13, 2010 8:40 pm

carolc wrote:Two people I know (myself included :D ) missed it. But the IRS caught it and changed our refunds accordingly. I understand they are checking returns for this particular item because many people who do tax returns the old fashioned way (by hand) are missing it.

carolc


Be careful. I did Schedule M correctly, and the IRS "caught it" and changed it incorrectly.

Jeff
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Postby tj » Tue Apr 13, 2010 11:29 pm

jsl11 wrote:
carolc wrote:Two people I know (myself included :D ) missed it. But the IRS caught it and changed our refunds accordingly. I understand they are checking returns for this particular item because many people who do tax returns the old fashioned way (by hand) are missing it.

carolc


Be careful. I did Schedule M correctly, and the IRS "caught it" and changed it incorrectly.

Jeff


This happened to my sister...the IRS sent her a check HIGHER than she was expecting. Who knows?
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Schedule M

Postby Dolomite » Wed Apr 14, 2010 2:02 pm

Is Schedule M a permanent addition to the tax code, is this just part of the short-term stimulus package?
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Postby gkaplan » Wed Apr 14, 2010 2:24 pm

I think 2010 is the last year it's in effect.
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Already sent in

Postby hollowcave2 » Wed Apr 14, 2010 3:49 pm

Yup, I missed this one. I already sent in my 1040 and I am getting a refund, but I didn't realize that I could have claimed an extra $400 by filling out Schedule M. Maybe I should have used a tax software.

Anyway, do I really need to file 1040-X or do I just send in the Schedule M?

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Postby Christine_NM » Wed Apr 14, 2010 4:01 pm

I still can't figure out if I needed to fill out Schedule M. I didn't, and mailed in my paper return 2 weeks ago.

I'm on SS and got the $250 last year. I don't have any earned income and there was no withholding tax to be affected. I'm not taking any credits that would have to be reduced by the $250 amount. But was the $250 taxable income? Seems like I read last year that it was not. But maybe that was one of the earlier rebates. Geez, is consistency too much to ask for?

There's an overpayment which I applied to 2010 taxes rather than take a refund. I am flummoxed. I suppose the IRS will let me know eventually what the score is.
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Postby hollowcave2 » Wed Apr 14, 2010 4:16 pm

With no earned income, I don't think you qualify for this particular credit. And since you got the $250, that's a subtraction on Schedule M anyway, so I don't think this applies to you.

The way I read Schedule M, this does not affect you. There's a separate worksheet to determine if any of your Social Security benefits are taxable.

Good luck.

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1040-X

Postby hollowcave2 » Wed Apr 14, 2010 4:18 pm

Well, I have form 1040-X in my hand and it doesn't look like any big deal to fill it out with Schedule M. So that's what I'll do, and also be happy that I'm getting more money that I didn't expect.

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Re: Already sent in

Postby HueyLD » Wed Apr 14, 2010 4:20 pm

hollowcave2 wrote:I already sent in my 1040 and I am getting a refund, but I didn't realize that I could have claimed an extra $400 by filling out Schedule M. Maybe I should have used a tax software.

Anyway, do I really need to file 1040-X or do I just send in the Schedule M?

If you mailed in yours, there is an excellent chance that the IRS will catch your error and give you the $400. You should just wait.

Christine_NM

You shouldn't have to worry about the Sch. M if you did not have a paid job and you had received your $250. This schedule is used for those who are eligible to claim the $250 (for retirees) or $400 (for those in the work force).
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Postby Christine_NM » Wed Apr 14, 2010 4:50 pm

Thanks, Huey. That's what I thought when I looked at all the new forms that came with 1040, but now with all the hype I was wondering if I did the right thing.
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Postby Quidnam » Thu Apr 15, 2010 11:51 am

I was one of the many folks who forgot to include Schedule M when filing our joint return back in February. The IRS promptly flagged the issue, corrected it, and included an extra $800 in our direct deposit. A letter came later indicating no further action was required.
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Postby nisiprius » Fri Jun 18, 2010 5:00 pm

Well, I was glad Bogleheads called my attention to this, but I had already mailed my form in without schedule M.

Yesterday a check for $800.26 arrived, and today the letter explaining it arrived. They caught the error, corrected it themselves, and sent the check for $800--plus interest--without my asking or needing to file an amended return.

I think that's decent of them. Sure, it's my money, but they could have made things a lot harder.
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Postby foxfirev5 » Fri Jun 18, 2010 5:06 pm

Likewise I recieved $800 additional refund over the $39 I anticipated. I guess its time for the old guy to spring for the tax software next year.
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Free Tax Preparation and Filing Services

Postby tomd37 » Fri Jun 18, 2010 5:42 pm

Foxfire,

Spring for tax software or seek out an AARP Tax-Aide or VITA site for free tax preparation and filing services. We are trained each year on all the updates to the tax laws.
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Postby nisiprius » Fri Jun 18, 2010 7:02 pm

foxfirev5 wrote:Likewise I recieved $800 additional refund over the $39 I anticipated. I guess its time for the old guy to spring for the tax software next year.
In my case, the tax software I was using (H & R Block At Home) could have caught the omission.

There is an final "error check" step which actually did catch it. And the "error check" is easy enough to find. But it does allow you to print a return without doing the error check, and without reminding you.

I think some other years I must have used software that automatically forces the error check before printing, and requires you to do something special to print without checking...
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