The Making Work Pay tax credit was a temporary measure to help reduce the financial burden on taxpayers caused by the 2008 recession. It was available for 2009 and 2010 and had set limits for eligibility. The full amount was $400 for individuals and $800 for married couples filing jointly, and it was refundable. The credit became redundant with the introduction of other tax-cutting measures in 2010.
The Making Work Pay tax credit was part of the American Recovery and Reinvestment Act of 2009, to help reduce some of the financial burden on most taxpayers, caused primarily by the 2008 economic recession. It was only available to the years 2009 and 2010 and had to be claimed in income taxes by those who were eligible. It had very set limits on who could claim the credit, but these were relatively generous, allowing many to claim full or at least partial credit that was fully refundable.
Those eligible for the Making Work Pay tax credit were people who received income from jobs or self-employment. They had a modified adjusted gross income (MAGI) of no more than $95,000 United States Dollars (USD) a year if single and $190,000 a year if married filing jointly. Taxpayers who were single and earned more than $75,000 or who were married filing jointly and earned at least $150,000 may qualify for a lesser amount of the credit.
The full amount of the Making Work Pay tax credit was $400 if one person was entitled to the full amount, or $800 for married couples filing jointly. As stated, this is a refundable credit. This means that if a tax filer does not owe money that reduces the credit, the government will owe them $400. Many people who claimed the credit were able to recover at least a partial amount or could reduce the amount of tax they owed at the end of the year.
To properly claim the credit, individuals had to file a Schedule M with their taxes. Failure to submit this form may mean that the credit was invalidated. Some people with very high incomes also found that instead of taking credit, they would end up owing a small amount.
The tax credit to make work pay was only meant to be temporary, and other tax-cutting measures have been in place since 2009. Some of these reduce the amount of tax most people in these income levels have deducted from their pay net. . When these additional tax breaks went into effect, especially in 2010, they made the Making Work Pay program redundant. In 2010, taxpayers who were able to claim this credit had a double advantage because they benefited from less tax being paid for the year and also from the credit.
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