Skip to comments.I Have A Tax Question About Schedule M (Vanity)
Posted on 02/15/2011 9:32:28 PM PST by OneVike
I need some advice from some fellow Freepers who may be able to give me some. I am filling out my tax form, I using the 1040A tax form. While filling it out I am directed to a form that is called Schedule M. I found out I qualified for it last year, after I paid my taxes. The IRS sent my wife and I a check for $500.00 with a letter stating we failed to use schedule m which qualified us for an additional deduction. Personally I think it was a way for the democrats to buy votes. Too bad for them it failed.
Anyway, I am filling out my 1040A, and I come to line 40 that tells me to see if I qualify for the Schedule M deduction. Also called the "Making Work Pay Credit". So as I am going over the form I learn that I do qualify for this deduction. Now here is the kicker. Before I take the Schedule M tax credit I owe approximately $1000.00.
Just so you have all the perimeters that might help, between my job and my wife's Social Security (She is a paraplegic as many of you already know) we brought in just over 41,000.00 last year. As I said I originally owed just under $1000.00, but after filling out the Schedule M paperwork I found myself getting a refund. Now I am not one to scoff at a return, especially after the way our savings has been whittled away by medical bills as of late. However, when I learned that I am now getting just under $15,000.00 back... Well quite frankly I figured I made a huge error in my calculations. After all, that amounts to more then a third of my annual income last year.
So I went back over the paperwork with a fine tooth comb, and again came up to just under $15,000.00 return. This just cannot be, so again I went over the paperwork. This time I turned off the radio, closed the door to my office and started with fresh forms that had no numbers to influence me. 30 minutes later I came to the exact same result. Instead of me owing uncle Sam $1000.00, I am entitled to a $15,000.00 refund thanks to the "Making Work Pay Credit".
Is there anyone else who has noticed such a drastic reduction in their tax obligation, or increase in there return by using Schedule M? See, while I qualify for the form, all that pertains to me on the form is line 1a, 3, 6, 7, and 8. Basically it is giving me another $15,725 credit against any taxes I owe.Can anyone shed light on this, because from what I understand anyone making who made less then $95,000.00 single or $190,000.00 married qualifies for Schedule M.
Finally, I do my own taxes every year. I have been for the last 35 years, and never ever have i been penalized for being wrong. fact is, last year was the first time I made an error, and the IRS sent me that check for $500.00 because they said I failed to take advantage of this very Schedule m which I am very, very confused by because of the amount of my return.
You aren’t alone:
You must have done some math wrong there. The best you’re gonna get out of Schedule M is that it takes $800 off the bottom line of your final tax liability. Did you multiply by 2 or 0.02 on line 2 for example.
Line 2 of the Schedule M worksheet?
Or the 1040A Taxform?
I got the same check "out of the blue" last year with the same explanation.
Unfortunately I have no answer, only a ping for what answers you may get.
We decided that since I missed such a large "deduction" that we would go the professional preparer route this time around - no telling what this bunch has to give away that I am missing.
I took the amount from form 1040 line 27 and put it on the form as they asked
I then deducted it from my income and it came up with about 15,700
The I was told to put that in line 40 of my tax form
Take it while you can get it.
Then go back to Galt’s Gulch.
Look at lines 5-9 on Schedule M. You should be doing some math and get something on all of those lines, and it sounds like your $15,000 is just dropping through.
On Schedule M, but I meant line 8 where the 2% calculation is.
I have been doing my taxes for 15 years, besides the BS deductions I just don't trust this bunch. If I can hire a professional for a couple hundred bucks, might as well let his license accept the burden of any potential audit.
That is going to be the approach from my end anyway
Doing my best but I have some stocking up to do to get "Galt" - Keep on, keeping on .... as they say
I just realized I was given the wrong form. I am using an earned income credit one, instead of the schedule M.
Before spending a lot of money on a tax preparer if you only have problems with one form there is another option. Call the IRS phone number listed on your instructions, and ask for help with the Schedule M. They will direct you to someone who will help you understand what you should do. Do it soon before the rush. I had 3 different questions which I took to 3 different people in IRS. They were knowledgeable and helpful in their area of expertise. I have caught tax preparers in errors, so be careful. At least the IRS gives you an ID number in case their people make a mistake that you later have to correct.
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