Tax Day 2011: Schedule M could be worth up to $800
On Tax Day 2011, the 'Making Work Pay' tax break, which can be worth up to $800 per household, is one of several tax credits for which filers may be eligible.
American workers can dial "M" for money when they file their taxes this month. That means Schedule M, the tax form to fill out to claim a "Making Work Pay" tax credit.
The tax break can be worth up to $400 per individual and $800 per household.
It's an example of the kind of savings that can be reaped from tax credits, several of them new or expanded under President Obama. A tax credit is a dollar-for-dollar cut off your tax bill. Some credits are refundable, which means people can claim them even if they owe no income tax.
If Schedule M sounds familiar, but only vaguely so, that's because it was new last year.
The refundable Making Work Pay credit was created as a tax break in the American Recovery and Reinvestment Act of 2009. And Congress let the credit expire at the end of 2010, so you won't be thinking about Schedule M next year.
The Internal Revenue Service points to other popular tax credits you should consider as part of your 2010 return:
• The Earned Income Tax Credit is a refundable credit designed to help lower-income workers.
• The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent. The credit is designed to enable you to work or look for work.
• The Child Tax Credit offers as much as $1,000 for each qualifying child. It can be claimed in addition to the credit for child and dependent care expenses.
• The Saver's Credit, also called the Retirement Savings Contributions Credit, is designed to help people of low or moderate incomes to save for retirement. The credit is available in addition to other tax savings that apply to retirement contributions.
• The American Opportunity Tax Credit helps parents and students offset the cost of higher education. An expanded and renamed version of the Hope Credit, it covers 100 percent of the first $2,000 spent per student each year on tuition and related expenses, plus 25 percent of the next $2,000 spent.
With all these credits, income limits and other factors apply in determining whether you're eligible.
For the Making Work Pay credit, taxpayers who file Form 1040 or 1040A should use Schedule M to figure their amount and to determine if they have already received the full credit in their paycheck. The IRS says taxpayers who file Form 1040-EZ should use the worksheet for Line 8 to figure the credit.
Tax Day 2011:
Part 1: When is the tax deadline? Hint: It's not April 15.
Part 2: What's new for homeowners?
Part 3: Checking on your refund? There's an IRS app for that.
Part 4: When did America levy its first income tax? The Civil War.
Part 5: Schedule M could be worth up to $800
Part 6: Four ways to protect your tax returns from data thieves
Part 7: Last-minute tips to keep the Internal Revenue Service away
Part 8: Tax Day 2011: Why do presidents release tax returns? Hint: 'I am not a ...'