A SOLDIER'S PERSPECTIVE
THE WEB'S LEADING MILITARY BLOG SINCE 2004
EDIT: Harold in comments corrected my terminology. This is a CREDIT, not a deduction. Take the credit. Harold also provided an IRS link to this information.
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I wanted you to know that I was informed by a woman who is a tax accountant that some soldiers are having their returns rejected when they claim the Making Work Pay deduction (schedule M) if they have the 2009 tax year claimed as tax exempt status because of combat pay.
Although your pay is tax exempt, it is still earned income and still eligible for the deduction. This ArmyMom (language alert) said you have to call and talk to a live IRS person to correct the error because it is a glitch in the electronic filing system.
Make sure you follow up and push the issue. It is money that you are entitled to and you should not allow the government to keep it!
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harold
Hello CJ,
I was wondering if I was reading the blog right. I’ll read up some more on the “Making Work Pay”, but there appears to be a misconception between what the ArmyMom is reporting and your entry. ArmyMom is correct in that the “Making Work Pay” is a credit, instead of a deduction. As a credit, the amount is taken off or added to the bottom line. As a deduction, it only lowers the amount of gross income.
In this case, if the soldier had exempt status due to combat pay, the credit of $400 is owed to the soldier (unless they are married, then the amount is $800).
For more info, chase the following link:
http://www.irs.gov/newsroom/article/0,,id=205922,00.html
FYI: I really think they should do away with all federal taxes and implement a national sales tax. Get the government out of my back pocket.
LL
harold, you are correct. Bad terminology. It is a credit and soldiers who are claiming the full year 2009 as tax exempt combat pay are entitled to that credit. But with the glitch, returns are sometimes being rejected. Soldiers should push to get that money returned to them.
Geatley
Filed my taxes without the Form M and believe it or not the IRS corrected my return and I got almost $600 more back then expected.