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Put the ‘making work pay’ credit to work

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in Small Business Tax

Q. I’m self-employed and my wife works part time. Do we claim the Making Work Pay credit on our 2009 return? A.S., Louisville, Ky.

A. Yes. Assuming your 2009 income was not so high that you are affected by the phaseout rule, a married joint-filing couple can claim a Making Work Pay credit of up to $800. However, the impact on your tax bill may be lower than expected if your wife already collected some of the credit in advance via lower federal income tax withholding on her 2009 wages.

Fill out new Schedule M, Making Work Pay and Government Retiree Credits, to calculate the credit.  

Tip: The Making Work Pay credit starts phasing out for unmarried filers with AGI above $75,000 and married joint-filing couples with AGI above $150,000.

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