Making Work Pay Question

On your joint return the maximum credit (assuming no AGI-related phaseout) is the lesser of $800 or 6.2% of earned income, which includes net income from self-employment. Subtract from that any $250 payments you get. The balance is available as a refundable credit on your 1040.

-------------- Phil Marti, VITA Volunteer Clarksburg, MD

The only quibble I have with this is in reference to $800 being the max, since there is only one spouse with the schedule c business. After all, I don't think the $800 will apply to me, what with my spouse not working and only I have wages.

ChEAr$, Harlan Lunsford, EA n LA

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It's like this. My wife and I both get Social security, just as you and your both get VA disability. So we both got out 250$ last month. She doesn't work, so that's all she gets. I still do, and will compute my maximum credit of $400 next year at tax time, but will have to subtract my 250$ from that. Mine is based on wages, but could be from schedule c instead.

Results are: wife got 250, and I got the 400.

ChEAr$, Harlan Lunsford, EA n LA

"scott s." wrote

My take on it is that the $250 from SSA - that is how it's supposed to be paid out - is not tied to the potential $400 / $800 credit for working folks. I have not seen anything that says you have to off-set one with the other.

Harlan Lunsford wrote in news:wjtVl.5859$ snipped-for-privacy@bignews7.bellsouth.net:

Got it. thanks to all.

scott s. ..

Here is something I found.

Excerpt form the IRS web site (a rare spelling typo included), emphasis added:

"Q3. The Making Work Pay credit is to be *reduced* for qualifying individuals receiving payments under the economic recovery payment provision for recipients of certain benefits from the Social Security Administration, *Deptartment* of Veterans Affairs and the Railroad Retirement Board.[...]"

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-Mark Bole

I don't see anything in the law (IRC 36A) that supports this conclusion. It just says $400 ($800 on a joint return) without any indication that it's limited to $400 per spouse.

-------------- Phil Marti, VITA Volunteer Clarksburg, MD

The IRS has released the draft version of the form that calculates the credit ...