Most Taxpayers Eligible For $400 Tax Credit

By Emory Bryan, The News On 6

UNDATED -- The deadline isn't far off to have your taxes done, but they're not finished until you've checked on a new tax credit that almost everyone can take.

It's another element of the stimulus package -- a two-step tax reduction that started last year through payroll checks and continues on the tax returns with a credit of $400 per person.

"It applies for 2009 and 2010, so we'll get the benefit for two years," said Cynthia McGhee, a Certified Public Accountant.

The "Making Work Pay" tax credit is new for the 2009 tax year, so accountants are getting a lot of questions about it. Turns out, just about everyone qualifies and it's easy to get the money.

"When we set up a new client, the 1040 comes in and the Schedule M comes with it," said McGhee.

The Making Work Pay tax credit is reported to the IRS on "Schedule M." It's $400 for individuals with income as long as it's less than $75,000 a year. The credit is $800 for couples making less than $150,000 a year. It's a refundable credit, meaning people can get the credit even if it's more than the taxes they owe.

"It's designed to keep more money in your pocket all year long, so they reduced the amount of withholding taken out every time you're paid, and on top of that you're getting a year end credit, that's sort of a stimulus payment that comes out," said McGhee.

The instructions are longer than the paper form and computer programs add in the tax credit automatically. 

McGhee says it's almost impossible to miss, unless taxpayers are doing returns by hand, and are not reading all the directions. 

Should a person miss it, the IRS should catch it.

"The IRS will notice that when your file is submitted and they will automatically adjust the refund or balance due to give you the benefit of that credit," said McGhee.

The tax credit is available regardless of the tax form that's used, even the 1040 EZ form has a spot on it for the credit.