Why Isn't the Making Work Pay Credit Included on 2012 Tax Returns?
The Making Work Pay Credit was in effect for only two years, 2009 and 2010. However, the credit was replaced for 2011 and 2012 by what's known as the Payroll Tax Holiday or Payroll Tax Cut.
That means that if you work, you have ALREADY received the credit in your paycheck.
There is nothing to report on your 2011 and 2012 tax return.
For many working taxpayers, the payroll tax cut could be an improvement over the credit, which was worth up to $400 per individual or up to $800 per married couple.
For one thing, the payroll tax cut might have put more money in your pocket last year. And you don't have to bother reporting it on your 2011 or 2012 tax return like you did with the Making Work Pay Credit. So TurboTax won't ask you about it or require you to file Schedule M, used to report the credit.
The payroll tax cut reduced the share of the Social Security tax that employees normally pay on earned income, from 6.2% to 4.2%. So a family earning $60,000 last year, for example, got a boost of more than $1,000 in paychecks throughout the year.
If you are self-employed, you'll get a reduction in your self-employment tax, from 12.4% to 10.4%. TurboTax will calculate that for you.
Note: Unfortunately, those without earned income, such as retirees, will not get the benefit of the Payroll Tax Cut, as they did with the credit in 2009 only.
