Making Work Pay

[puck36]

I guess I don't understand the Making Work Pay. In 2009 my payroll withholding was reduced by $400. When doing my tax return it added $400 to my refund. Can anyone tell me why if I already got the $400 in reduced taxes why am I getting another $400 on my tax return?

[puck36]

Here is what I found out from the local office of the IRS. The tax table was never changed. They just let the payroll tax be less so that everyone would get the extra money right away instead of a lump sum at the end of the year. So everyone needs to do the Scheduled M and put it on the tax return in order to make up from getting it during the year. If you don't do Scheduled M you will be short on taxes by $400 or $800.

[creditcardfree]

Thanks for the heads up!

Another way to look at it is: The amount that wasn't withheld because of making work pay needs to be added to what was withheld in 2009 to show the total offset to taxes owed.

These two added together reduce the amount of tax you may owe. Or if more than your tax, will create your refund. If you don't add it in, your refund may less!!

[wvufan1985]

I still don't understand this. It appears like I'm getting double the "Making Work Pay" I should be?

[puck36]

From what I understand is that the tax tables never changed. The withholding table changed so that everyone gets more money per check.

[creditcardfree]

If they had lowered the tax tables, they wouldn't need to add any to the amount you had withheld ( which is really what they are doing on the payment section of the 1040)

Although you may have received the funds from the credit early, you still have to claim the credit on your 2009 return. Doing so ensures that the funds from the credit are counted as payment toward your 2009 tax liability. This lowers your tax due or increases your refund compared to what it would have been without the credit. If you don't claim the credit on your return, you'll have a higher tax liability, and would essentially be giving the credit back.

Found the above quote at this website

Did you know that Making Work Pay is still in effect for 2010?

[puck36]

The website that you listed said the following:

Especially since the Making Work Pay Credit is also for 2010, you may want to avoid having too little withheld.

[creditcardfree]

Puck, I just wrote a thread how the irs has changed the withholding tables for 2010. Generally, more is being withheld then in 2009. Always best to use the calculator at the irs for the correct withholding each year.

[GrimJack]

Generally, the IRS (actually, the validity check program) will catch it if you miss the sched. M credit. It wierds people out to get a notice saying "sorry, you did not ask for enough back so we 'fixed it' for you".