Payment methods and distribution of the Making Work Pay Tax Credit
Jan 14, 2010 Tax Changes
Payment methods and distribution of the Making Work Pay Tax Credit
Making Work Pay Credit (MWPC) as noted in a previous blog post is a refundable credit available in 2009 and 2010 worth 6.2% of earned income up to $400 ($800, MFJ) for taxpayers with a valid for work social security number. You cannot be a dependent of another taxpayer or identified as a non-resident alien. If you receive earned income as an employee you more than likely began receiving this credit beginning in April, 2009 as a reduction in the amount of federal income tax withheld from your paycheck; though not large, an amount was proportionally reduced so that your net pay was greater than what it had been at the beginning of the calendar year. If you completed the IRS Form W-4 in 2009 using single withholding status, the total tax withholding for 2009 would have been reduced by $400 (those using a married withholding status, $600).
Making Work Pay and Government Retiree Credits
Jan 13, 2010 Tax Changes
Making Work Pay and Government Retiree Credits
The American Recovery and Reinvestment Act of 2009 (ARRA) was passed to help the US economy, with almost $800 billion in stimulus money, to recover from the recent financial crisis. Three provisions affect the average taxpayer in 2009; the Making Work Pay Credit (MWPC), the Economic Recovery Payment (ERP), and the Government Retiree Credit (GRC).
In brief:
Making Work Pay Credit (MWPC) is a refundable credit available in 2009 and 2010 worth 6.2% of earned income up to $400 ($800, MFJ). You are not eligible for this tax credit if you do not have a valid for work social security number, are a dependent or non-resident alien. When filing MFJ, only the taxpayer needs a valid social security number. Most taxpayers will have already received this “tax benefit” through the mid-year reduction in tax withholdings.
2009 IRS Uniform Definition of a Child has changed
Jan 11, 2010 Tax Changes
2009 IRS Uniform Definition of a Child has changed
Beginning January 1, 2009, the Internal Revenue Service has changed their Uniform Definition of a Child regulation. As of 2009, a qualifying child (QC) must be younger than the taxpayer except when the QC is totally and permanently disabled. You cannot claim a child as a QC if they file a joint return with another individual unless that tax return is a claim for refunding payroll withholdings. IRS Form 8901, Information on Qualifying Children Who Are Not Dependents, is, as of 2009, obsolete. Your child is a QC only if you can and do claim them as a tax exemption. Furthermore, rules for filing IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, have changed. A divorce decree or other court documents no longer serves as notification a custodial parent has released the child tax exemption to the non-custodial parent; the non-custodial parent must file IRS Form 8332 that has the signature of the custodial parent.
Tags: 2009
2009 Earned Income Tax Credit (EITC) changes
Jan 10, 2010 Tax Changes
2009 Earned Income Tax Credit (EITC) changes
The Earned Income Tax Credit (EITC) is one of the few refundable tax credits available to the “average” tax payer. It is designed for the low-income individual by offsetting any income tax liability. It is important and, unfortunately, a target for fraudulent filings because any balance that remains after the tax liability is covered will be refunded to the tax payer. When a person supports dependents, the refundable credit can be significant.
Tags: EITC
New IRS forms to review before filing
Dec 26, 2009 Tax Changes
New IRS forms to review before filingSome new IRS Forms to review:
- Form 656 (revised 3/09) – Offer in Compromise
- Form 886-H-AOC (revised 7/09) – Supporting Documents to Prove American Opportunity Credit
- Form 886-H-FTHBC (revised 9/09) – First-Time Homebuyer Credit Supporting Documents
- Form 1040 Schedule A Itemized Deductions
- Form 1040 Schedule L Standard Deductions for Certain Filers
- Form 1040 Schedule M Making Work Pay and Government Retiree Credits
- Form 4506T-EZ – Short Form Request for Individual Tax Return Transcript
- Form 4562 Depreciation and Amortization
- Form 4684 Casualties and Thefts
- Form 5405 First-Time Homebuyer Credit
Tags: 2010
