As part of the American Recovery Reinvestment Act, the IRS offered a special tax credit for tax year 2009 and 2010 allowing taxpayers to receive additional refund. Married Filing Joint (MFJ) taxpayers can receive as much as $800 while the rest of the filers can receive as much as $400. The credit equals 6.2 percent of earned income up to the maximum amount. Thus, any eligible couple filing a joint return whose earned income is $12,903 or more qualifies for the $800 maximum credit. This is true even if the income is earned entirely by one spouse. Other taxpayers qualify for the $400 maximum if their earned income is $6,451 or more.Â The credit is “refundable,” which means that taxpayers can still avail of the credit even if they do not owe any taxes.
Taxpayers Not Qualified for the Credit
You cannot take the credit if:
- You are a non-resident alien.
- Your modified adjusted gross income (MAGI) is $190,000 or more – for married filing joint filers
- Your MAGI is $95,000 or more – for other tax filers
- You can be claimed as a dependent on someone elseâ€™s return.
- You (or your spouse) donâ€™t have a valid social security number.
Credit Phase-Out (Reduction)
If you fall into the following categories of taxpayers, you must reduce (phase-out) the amount of the credit that you will be claiming:
- Joint filers whose MAGI is more than $150,000 but less than $190,000.
- Other taxpayers whose MAGI is more than $75,000 but less than $95,000.
How to claim the credit:
To take the credit, you must complete Schedule M (Form 1040A or 1040) and attach it to your Form 1040 or 1040A. The credit must be entered on Form 1040, line 63, or Form 1040A, line 40. However, if you are filing just the Form 1040-EZ, you do not have to complete Schedule M. Instead, you can just enter the amount of your credit on line 8 of that form.
Source: IRS.gov. Publication 17. Instruction for Schedule M.