Help settle a dispute - taxes & making work pay

[Dancemom03]

Okay, so we've been snowed in way too long and I've apparently spent too much time on the phone this week. During one of those calls, the subject of taxes came up and I'm bored enough to continue to insist I must be right without actually being able to prove it...

DSIL is self employed (as am I, but in a different field) and we are having a huge debate about the making work pay credit. She hasn't done taxes yet b/c they'll owe but is certain that she should file a sch C even though she only had $200 gross income all year - too little to be reported on a 1099 so she has no documentation beyond a check stub. She claims she'll "get more than she made" with the MWP credit if she files as employed vs filing as a homemaker, which is what she was the last 11+ months of the year.

I agree with the bookeeping manager who she says told her to file as a homemaker b/c her income was less than $600 and they won't send a 1099 for it. Unless I misunderstand it, the credit is based on a small a portion of her earned income, not a flat-out $400, so there's no way she'd get $400 if she only made $200 all year. I'm thinking she wouldn't get more than $20, if that. She's sure she'll get the whole $400.

Anyone have any experience with the MWP guidelines by chance? I searched the IRS website but only got press releases and standard FAQs. I couldn't find a calculator for MWP.

 

[1PrincessMomma1]

If the file MFJ she'll get the $800 regardless of whether she worked or not. The credit is $400 for single/$800 married no matter if both spouses worked or only one worked.

 

[Tinker'n'Fun]

I can't answer your question but DH and I filed married - jointly. Since I am totally disabled, I received a check for $250.00 earlier this year and the difference in the MWP or $150.00. I had NO income for the last year, only SSD that is not taxable. So I did receive the full credit and did not make any earnings, so I guess it is possible for her to get the full credit.

 

[mominwestlake]

Is this the credit that was suppose to give you a few bucks more per paycheck? My dh owns a business and is assuming the company that does his paychecks gave him the credit. He told me he is too busy to call and find out

My question- is it $800 per couple (MFJ) even if I did not have a job?
His paycheck company would only take out $400 more than likely, right? I don't think they'd take out another $400 for me. The reason he has no clue if it is in his check without actually calling is because he is paid on commission and check amounts vary.

 

[wdwfan16]

My question- is it $800 per couple (MFJ) even if I did not have a job? YES


His paycheck company would only take out $400 more than likely, right? If his was listed as married the company should have done the $800.

 

[badblackpug]

Seriously? Getting a "refund" when you didn't even work? We work full time plus and are getting back less than people who didn't work at all!

I wish just one loophole, ever, would apply to me........

 

[BellePrincessBelle]

Seriously? Getting a "refund" when you didn't even work? We work full time plus and are getting back less than people who didn't work at all!

I wish just one loophole, ever, would apply to me........

It's not getting a "refund" when you didn't work it's an amount for MFJ meaning the credit times 2 just like the standard deduction for MFJ being 2x's that of a single person.

 

[Dancemom03]

I wish just one loophole, ever, would apply to me........

Me too!

As usual, I have learned something new today from the Budget Board. Thanks so much everyone. It looks like I was wr... wr.... wro... oh shoot, I can't even bear to type it. Maybe the fact that it has nothing to do at all with her $200 job though will help to mitigate my um... error...

 

[delmar411]

before everyone gets their panties in a wad, it's not a real credit. It's an adjustment in the tax tables. Because the 2009 tax tables were not adjusted in time, they choose to adjust it this way. Pretty much everyone will have the making work pay 'credit' on their income tax forms. It's right there on the 2nd page, near the bottom.

See schedule M...
http://www.irs.gov/pub/irs-pdf/f1040sm.pdf