Three New Credits

[dyne]

I just realized how complicated the three new credits will make preparation of tax returns
become for this coming year.
1. The Making Work Pay Credit of 6.2% of earned income is not to exceed $400 for one
taxpayer or $800 for a joint return. BUT, this credit MUST be reported on the tax return
and the credit reduced by the two other credits listed below.
2. Those who received Social Security benefits during November of 2008 or SSI,
Railroad retirement and VA disability benefits will get a one-time payment of $250 during 2009
for each spouse who had such income or benefits. This is NOT taxable. Again the Making
Work Pay Credit above reduces the amount of the allowable making work pay credit in item 1 above.
3. Certain government retires who do NOT receive social security benefits will be entitled
to a one-time payment of $250 during 2009. This credit reduces the amount of the
Making Work Pay credit outlined in item 1 above.
It appears that we will be required to calculate all or part of this on the 2009 tax returns.Actually
the heading should say: One New Credit with two reductions..

[ChEAr$]

All of the above

I just realized how complicated the three new credits will make preparation of tax returns
become for this coming year.
1. The Making Work Pay Credit of 6.2% of earned income is not to exceed $400 for one
taxpayer or $800 for a joint return. BUT, this credit MUST be reported on the tax return
and the credit reduced by the two other credits listed below.
2. Those who received Social Security benefits during November of 2008 or SSI,
Railroad retirement and VA disability benefits will get a one-time payment of $250 during 2009
for each spouse who had such income or benefits. This is NOT taxable. Again the Making
Work Pay Credit above reduces the amount of the allowable making work pay credit in item 1 above.
3. Certain government retires who do NOT receive social security benefits will be entitled
to a one-time payment of $250 during 2009. This credit reduces the amount of the
Making Work Pay credit outlined in item 1 above.
It appears that we will be required to calculate all or part of this on the 2009 tax returns.

is correct.

One fellow received his $250 social security check and found out his income or assets
were suddenly too much to receive his usual $300 food stamps for that month.

Is this a great country, or WHAT?

Memo to Obama; don' t do us any more favors.

[taxxcpa]

Food stamps

is correct.

One fellow received his $250 social security check and found out his income or assets
were suddenly too much to receive his usual $300 food stamps for that month.

.

If they take away my food stamps, I hope the garbage cans in my neighborhood have some gourmet left-overs.

I think everyone should get food stamps and an EIC if they make under $ 200.000 per year.

[abctax]

Preliminary form for reporting

http://www.irs.gov/pub/irs-dft/f1040sm--dft.pdf

This will be fun......

[MLINDER42]

three new credits

Let us hope the software people do it correctly or it will be a big headache.

[Burke]

http://www.irs.gov/pub/irs-dft/f1040sm--dft.pdf

This will be fun......

Downloaded and printed. It's really not that complicated.

[dyne]

The recovery rebate credit was only ONE computation and it turned out to be a lot
of trouble for us. For 2009 we must deal with THREE computations which I anticipate will be a pain!

[BHoffman]

If they take away my food stamps, I hope the garbage cans in my neighborhood have some gourmet left-overs.

I think everyone should get food stamps and an EIC if they make under $ 200.000 per year.

I have a restaurant client who will feed me in a pinch. Taxable barter on the larder.

[dyne]

My thanks to abctax and Burke for telling me about the draft for the new form M.
IF I understand it correctly the form M will only be required if the tax return reflects earned
income from wages, sch C or F or a k-1.The Making Work Pay Credit is allowable up to $400 for a single person or $800 for a joint return. However the $250 economic recovery payment for a single person or $500 for a married couple will REDUCE the Making Work Pay Credit. Then for those who are retired from being employed by the U. S. Government or state or local goverment and who receive a pension or annuity and who do NOT receive social security benefits will have the Making Work Pay Credit reduced by $250 credit each for a single person or $500 on a joint return if they both have such government annutities or pensions, etc. In addition if the return reports total income in excess of $75,000 for a single taxpayer or $150,000 for a joint return, the Making Work Pay Credit is reduced by 2% of the income which exceeds $75,000 or %150,000.. And how are we to know how much of these economic recovery payments were actually received during 2009? I understand that these amounts are NOT taxable. Perhaps the amounts will be reported on the annual Social Security statement.For clients who are retired and have NO earned income the form M will NOT be required. I believe that preparing this form alone will take an hour of our time. Do I understand this correctly?

[Burke]

I think so. I have a married couple, young, but who both work a little at jobs and collect SSI. They got the $250 payment (each) and will qualify for the $400 (each) MWP credit. So based on this form, it appears they will get a net $300 credit ($800 - $500) on their tax return in 2009. I would think next year's software will automatically calculate this when I input the W-2 and SSA-1099 and/or RRB-1099 figures. And it should autocalculate 2% exclusion based on AGI. Anyone who gets Social Security and WAS receiving it in either November 2008, December 2008 or January 2009 and still living in May 2009 would have gotten the $250. However, I think SSA/RRB SHOULD put it on the form somewhere. Don't know if they will. Also, since VA benefits are not taxable or reported, I guess you will have to assume they got it in that case unless they can show otherwise. I would not think it would take an hour to complete this form, even if you were to do it manually.

[Larmil]

I have a married couple, young, but who both work a little at jobs and collect SSI. They got the $250 payment (each) and will qualify for the $400 (each) MWP credit. So based on this form, it appears they will get a net $300 credit ($800 - $500) on their tax return in 2009. I would think next year's software will automatically calculate this when I input the W-2 and SSA-1099 figures. And it should autocalculate 2% exclusion based on AGI. Anyone who gets Social Security and WAS receiving it in November, 2008 would have gotten the $250. However, I think SSA should put it on the form somewhere. Don't know if they will. I would not think it would take an hour to complete this form, even if you were to do it manually.

Is SSI reported on a SSA-1099?

[Burke]

Yes, it is. Upon further review of the eligibility requirements for this payment, I don't see how SSA/RRB can NOT show it on the 1099 form somewhere, as there are a number of individuals who were not eligible for it, most notably minor children who receive SSA and benes whose benefits began February 2009 or later, but there are other circumstances as well. See SSA website, FAQs, "Will ALL SSA and SSI beneficiaries receive a one-time economic recovery payment of $250?" Hopefully, that will be the case, and we won't have to go to the SSA website to check every one like we did the Stimulus rebates. Preparers, unite and contact your professional organizations!

[dyne]

AGAIN: The heading of this post which I started is wrong. It should have been New Credit with TWO credit reductions.
Completing the schedule M may not be that time consuming but obtaining the information to
place on the form will be time consuming. I have prepared a questionnaire which I will
have each client SIGN. What if they do not know if they did not receive the $250 economic
benefit payment or the special $250 for being a certain goverment retiree who was NOT
eligible for social security benefits? Or what if they are SURE that they did not receive
it? I have already received one call from a wife who said that she did not receive her $250 Economic Benefit payment, but her husband received his. I predict that this will be MORE complicated than the Recovery Rebate Credit reflected on the 2008 tax returns. And don't forget about the VA disability benefits which do NOT show up on anything we get from our clients.And if this does not consume more of our time, the reinstated Energy Tax Credit will.

[Black Bart]

I

Is SSI reported on a SSA-1099?

don't believe it is. SSI is non-taxable income.

I agree with some other posters -- before this is over, it'll be a huge time-consuming mess.

[dyne]

Thank you Black Bart. But since SSI is NOT taxable and IF it does not appear on the
social security annual statement, we preparers will not know about it. It triggers the
allowance of the $250 Economic Benefit payment, just as does VA benefits. It gets
worse and worse.