Don't Forget About the Making Work Pay Credit

With all the press surrounding the new payroll tax holiday for 2011, it's easy to forget about the Making Work Pay Credit. The credit, which was the cornerstone of President Obama's economic stimulus plan, was replaced by the new payroll tax holiday.




Unlike the new payroll tax holiday, the number of taxpayers eligible for the Making Work Pay Credit is limited. The credit was intended to provide tax relief for working and middle class families, so phase-outs apply at the top. In addition, since the idea of the credit was to provide an incentive to work, taxpayers must have earned income, meaning wages from working, to qualify for the credit.Additionally, while the new payroll tax holiday is based on a percentage of income, the Making Work Pay Credit was a flat credit of up to $400 for individual taxpayers and up to $800 for taxpayers married filing jointly. And as with the payroll tax holiday, self-employed persons are eligible for the Making Work Pay Credit.

You're likely seeing the benefit of the new payroll tax holiday in your paycheck now. Don't miss out, though: The Making Work Pay Credit was still law for 2010, which means that you'll figure your credit, if eligible, on your federal tax return for 2010 (due by April 18, 2011). In most cases, the credit will be figured using a Schedule M. The credit is refundable, too, so that could mean extra dollars in your refund check. If you have questions about the specifics of the credit and how it applies to you, be sure to ask your tax professional.

Tax Tips for Real Estate Agents and Brokers

Most real estate agents and brokers receive income in the form of commissions from sales transactions. You're generally not considered an employee under federal tax guidelines, but rather a self-employed sole proprietor, even if you're an agent or broker working for a real estate brokerage firm. This self-employed status allows you to deduct many of the expenses you incur in your real estate sales or property management activities. Careful record keeping and knowing your eligible write-offs are key to getting all of the tax deductions you're entitled to.

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What is the Educator Expense Tax Deduction?

The Educator Expense Tax Deduction allows teachers and certain academic administrators to deduct a portion of the costs of technology, supplies, and certain training. Here’s what teachers need to know about taking the Educator Expense Deduction on their tax returns.

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Self-Employed Less Than a Year? How to Do Your Taxes

Have you been self-employed less than a year? If you’re just starting out, it’s possible you worked at a job earlier in the tax year before making the switch to self-employment, or you’re working multiple jobs. In this case, you may have more than once source of income you’ll need to report on your income tax return.

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Taxes for Grads: Do Scholarships Count as Taxable Income?

Heading off to college to broaden your horizons is exciting, but funding your education via scholarships? That's even better. Scholarships often provide a path to education that might not be feasible otherwise, which is why the Internal Revenue Service (IRS) can be generous in minimizing students' tax obligations. But sometimes scholarship money does count as income, and it’s better to find out now if your scholarship adds to your tax liability than to have a surprise later. Here’s how to decode your scholarship taxation.

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