New Tax Forms and Schedules for 2009 Tax Year

Form 1040 for 2009 tax year has two new schedules.

Schedule L is used for claiming (a) the additional $500 or $1,000 tax deduction for property tax paid, (b) the sales tax paid on a new car purchased between Feb. 17, 2009 and December 31, 2009, and (c) a net disaster loss (together with Form 4684).

Schedule M is used for claiming the Making Work Pay tax credit. Making Work Pay tax credit is the $400/$800 tax credit added in the economic stimulus law.

While we are at it, here’s a list of the tax forms you will need for the various new tax incentives for 2009 tax year.

Tax Incentive Form
Home Buyer Form 5405
Residential Energy Efficient Property Form 5695
American Opportunity (college expenses) Form 8863
Alternative Motor Vehicle (hybrid and diesel cars) Form 8910

If you qualify for these incentives, make sure your tax return includes these forms and schedules.

Now, here’s a quiz about the $400-per-worker Making Work Pay tax credit. As you may know, the IRS changed the tax withholding tables in February 2009 to reflect this credit. In effect, people have already received this $400 credit through lower withholding and bigger paychecks. If you fill out a Schedule M and ask for the tax credit, are you double-dipping on the credit? Why and why not?

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  1. Pelon says

    I’m going to wing the answer to the quiz since I don’t have time to go through all the forms:

    Claiming the credit on the Schedule M is not double-dipping since the amount of money withheld from a paycheck is only an estimate of the amount of tax due based on your salary and requested exemptions. Filing the Schedule M is what actually demonstrates to the IRS that you owe a lower amount of tax.

  2. RDT2 says

    Your withholdings were reduced under the assumption that you would file this schedule so its not double dipping. And the form’s instructions tell you to.

  3. TFB says

    Chuck – The answer itself may be easy, but I’m looking for the most convincing explanation.

    Pelon – If a person’s withholding is reduced by exactly $400 and this person qualifies for exactly $400 credit, does this person still have to file Schedule M?

  4. Chuck says

    It was not my answer, but RDT2 has the most convincing one for me: “… the form’s instructions tell you to.”

    My answer was going to be that withholding is not a factor in tax owed at all, so don’t even think about it.

  5. Dan says

    All other things being equal, if the withholding hadn’t been reduced, the refund would be larger, but that wouldn’t ahve been a 2009 stimulus (having more money to spend) but a 2010 one instead (larger refund). If you don’t file the Schedule – then you don’t receive the credit.

  6. Pelon says

    “If a person’s withholding is reduced by exactly $400 and this person qualifies for exactly $400 credit, does this person still have to file Schedule M?”

    No, they can choose to pay an additional $400 in tax instead. :)

  7. KD says

    To answer TFB’s question from comment # 4: Reducing your withholding by itself does not give you the tax credit. The Schedule M does. So yes, everybody , who qualifies for the tax credit, will have to file Schedule M to actually get the credit in the tax forms. This is a peculiar case as the tax credit was disbursed first by lower withholding even before filing for a tax credit. But since it is a one time event and not everybody qualifies, it is not accounted for in the tax tables of IRS. So the tax due is actually $400 more. Now add in Schedule M saying you want the credit and that $400 tax goes away. Some folks have multiple jobs and got the credit mutliple times. So they now have to pony up money to the IRS because too little of their income was withheld.

  8. Random Poster says

    Off topic, but this is the first time that I’ve visited this website and received a “Suspicious Website” alert from Microsoft, claiming that this may be a “Phishing Website.” I’m running Vista, if it matters.

    On topic, a taxpayer has to file out a Schedule M because the goverment doesn’t want to make filing one’s taxes easy. Probably not the answer that you are looking for…

  9. TFB says

    Random Poster – Thank you for telling me about the false warning. I filled out a form to ask Microsoft to correct it.

    As to the quiz question, I would give the best explanation to Chuck. Withholding has nothing to do with taxes owed. I can artificially change my withholding and get a bigger paycheck. That’s not a tax cut. Doing so only makes me owe more taxes and interest and penalty at tax filing time. “so don’t even think about [withholding]” is exactly right.

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