TurboTax / Tax Calculators & Tips / All Tax Guides / Taxes 101 / What Is a Schedule M IRS form?

What Is a Schedule M IRS form?

Updated for Tax Year 2010


Note: The content of this article applies only to taxes prepared for 2009 and 2010. It is included here for reference only.

In order to take the making work pay tax credit, the IRS requires you to prepare a Schedule M with your federal tax return.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Start for Free

If you earn money from working during the year, you may be eligible to claim the making work pay tax credit. For the 2010 tax year, the credit allows taxpayers to reduce their tax bill up to $400, or $800 for those filing joint returns. Before you can take the credit, the IRS requires you to prepare a Schedule M and attach it to your federal return.

Who can claim the credit?

To qualify to the making work pay tax credit, you must have earnings from work-related activities during the year, such as employment. If you are self-employed or only receive investment income such as interest and dividends, you will not qualify. Additionally, your Adjusted Gross Income (AGI), which is your gross wages minus specific IRS adjustments to income such as student loan interest and the IRA contribution deduction, must not be $95,000 or more, or $190,000 or more if filing a joint return.

If you satisfy these requirements, the credit is only available if another taxpayer cannot claim you as a dependent on their own tax return.

Limitations on your credit

During 2010, the federal government provided some taxpayers with a $250 economic recovery payment. If you receive this payment during the year, you must reduce your allowable credit amount by $250. When you prepare the Schedule M, there is a line item where you can reduce your credit for this payment.

If you file a joint return and only one spouse receives the economic payment, you still must reduce your joint credit by $250. For expatriates who take advantage of the foreign earned income exclusion on either Form 2555 or 2555EZ, for purposes of the credit, you must increase your AGI by the exclusion you claim. This can effectively reduce your credit amount or make you ineligible to claim it.

Calculating your credit on Schedule M

The Schedule M is a one-page form that requires you to prepare a simple calculation. In 2010, if your gross wages are more than $6,451, or $12,903 when filing a joint return, then you first subtract $75,000 from your AGI. If your AGI exceeds $75,000, then you multiply the difference by 2 percent and subtract the result from the relevant maximum credit amount of $400 or $800. The result is the credit you can claim on Schedule M; however, if it’s zero or less, you will not qualify for a credit. Furthermore, you reduce your credit by any economic recovery payment you receive during the year after performing this calculation.

How to file Schedule M

After calculating your credit amount on Schedule M, you must transfer the credit to your personal tax return. Since this credit offers a dollar-for-dollar reduction of your tax bill, subtract it directly from the amount of income tax you calculate at the end of the return. Before you e-file or mail your return, make sure you’ve attached the Schedule M to it; otherwise, the IRS may disallow your credit or delay sending your refund.

If you use TurboTax, it can automatically calculate the making work pay credit and make sure you’ve received everything you’re entitled to, based on your W-2 and other tax information.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

DAYS left
LAST DAY to file
1 DAY left
to file your taxes by April 15
2014 taxes due today
Start for Free
* Important Offer Details and Disclosures
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Actual prices are determined at the time of print or efile and are subject to change without notice. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal efile of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Prices subject to change without notice.
  • TurboTax Mobile: Actual prices are determined at the time of print or efile and are subject to change without notice. Come back here before you file to confirm that the price has not changed, especially if it's been a while since you downloaded this app.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app features and content. TurboTax mobile app devices supported include Android 4.1 and above, iOS 8 on iPhone 4s and above, and iPad 2.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $34.99 Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • About our TurboTax Product Experts: Customer service and product support (phone or chat) vary by time of year. Phone support not included with Free Edition.
  • About our credentialed tax experts: Live tax advice service is available for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Click here for full terms and conditions. Not available for TurboTax Business customers.
  • Get up to 10% on top of your federal refund: Amazon.com Gift Card offer is for federal refunds only. Limits apply ($2000 per e-card, maximum $10,000 per customer). Offer available only for TurboTax Online (except Federal Free Edition) or CD/download versions sold and shipped, or downloaded directly from Intuit or Amazon. Except as required by law, Amazon.com Gift Cards cannot be canceled, transferred for value or redeemed for cash.

    Amazon.com is not a sponsor of this promotion. Except as required by law, Amazon.com Gift Cards ('GCs') cannot be transferred for value or redeemed for cash. GCs may be used only for purchases of eligible goods at Amazon.com or certain of its affiliated websites. For complete terms and conditions, see www.amazon.com/gc-legal. GCs are issued by ACI Gift Cards, Inc., a Washington corporation. All Amazon ®, ™ & © are IP of Amazon.com or its affiliates. No expiration date or service fees.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2013 TurboTax products.
  • 4.8 out of 5 stars: Average based on customer ratings on TurboTax.com for TurboTax Online and CD/download products tax year 2014, as of January 2015.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • TurboTax CD/Download priority phone support: Priority phone support for TurboTax CD/Download Premier and Home & Business is accessible exclusively via the TurboTax.com Help Center.
  • Benefit Assist: After you file, TurboTax automatically shows you a full list of government benefits you may qualify for, like Food Stamps or reduced phone & utilities. Plus, we help you apply, saving you time and making it easier than ever to get more money! Estimate based on calculation of Benefit Assist users from tax year 2013 and published reports of average benefit and savings amounts from federal and state programs. Actual amounts and qualifications based on your individual situation; some individuals will not qualify. Feature may not be available for all customers.
  • Simplified State Experience: New, simplified state tax preparation available for most filers.
  • Eligibility for $25 cash back for returning Deluxe customers: Customers who have completed their 2013 taxes in TurboTax Deluxe (CD or download), and have completed their 2014 taxes in either TurboTax Premier or TurboTax Home & Business (CD or download), and apply here before 11:59PM PDT April 20, 2015, are eligible for $25 back. 2014 TurboTax Advantage users are ineligible for this offer. Terms and conditions are subject to change without notice.
  • $0 Upgrade Offer: Valid for customers who filed their 2013 taxes with TurboTax Deluxe (CD or download), completed prior year data transfer this year, and encounter an upgrade to either 2014 TurboTax Premier or 2014 TurboTax Home & Business (CD or download). Valid February 6, 2015 through April 20, 2015. TurboTax Advantage users are ineligible for this offer. This offer may not be combined with our $25 cash back offer. Terms and conditions are subject to change without notice.