With tax time rolling along, I find there are a lot of questions surfacing about the Schedule M, or Making Work Pay Credit. This is a new credit for 2009 which allows for a $400 credit if you have earned income from W-2 wages. The Making Work Pay Credit can be claimed on Schedule M on your 1040 or 1040A.
The credit is part of the American Recovery and Reinvestment Act of 2009, effective April 2009. It provides a maximum credit of up to $400 per single files and $800 for married for working married couples.
The credit is only available for individuals or couples that had earned income, which means they actually worked in 2009. Retirees and disabled will receive a $250 check but are not eligible for the Making Work Pay Credit, unless they received earned income in 2009.The form can be accessed on the IRS website at www.irs.gov/pub/irs-pdf/f1040sm.pdf.
The credit is 6.2% of your earned income and can be reduced if:
• You’re single and earn more than $75,000
• You’re married and have a combined income of more than $150,000
• You area government retiree and receive a credit
• You received the $250 economic recovery payment for certain social security, SSI, railroad retirement, veteran’s disability or pension benefits.
Those individuals that received a pension and have questions should contact their plan administrator. A two page instruction sheet on completing the Schedule M can be obtained at www.irs.gov/pub/irs-pdf/i1040sm.pdf 
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