1040 Sch M when Sch C losses exceed W-2 income

03-28-2010, 10:46 PM

A client just received a letter from IRS giving them the Make Work Pay
credit when my interpretation is that they do not qualify.

Assume client otherwise qualifies for MWP and has the following--

W-2--- 40,000
Pension income-- 50,000
Schedule F loss of 45,000

My reading of Schedule M instructions including the worksheet says the
Schedule F loss offsets the W-2 income and thus no 800 MWP credit (MFJ).
Pension income should have no effect.

It appears IRS is not offsetting the W-2 with the Sch F loss and giving the
800 MWP credit to them.

Anyone else seen this or have any comments?

--
CMS VA CPA

03-28-2010, 11:01 PM

Sorry. Accidently posted to wrong group.

"CMS_VA_CPA" <cshanes@-Delete-This-Nospam-shanescpa.com> wrote in message
news:...
>A client just received a letter from IRS giving them the Make Work Pay
>credit when my interpretation is that they do not qualify.
>
> Assume client otherwise qualifies for MWP and has the following--
>
> W-2--- 40,000
> Pension income-- 50,000
> Schedule F loss of 45,000
>
>
> My reading of Schedule M instructions including the worksheet says the
> Schedule F loss offsets the W-2 income and thus no 800 MWP credit (MFJ).
> Pension income should have no effect.
>
>
> It appears IRS is not offsetting the W-2 with the Sch F loss and giving
> the 800 MWP credit to them.
>
>
> Anyone else seen this or have any comments?
>
>
>
> --
> CMS VA CPA
>

03-29-2010, 12:49 PM

"CMS_VA_CPA" <cshanes@-Delete-This-Nospam-shanescpa.com> wrote in message
news:...
>A client just received a letter from IRS giving them the Make Work Pay
>credit when my interpretation is that they do not qualify.
>
> Assume client otherwise qualifies for MWP and has the following--
>
> W-2--- 40,000
> Pension income-- 50,000
> Schedule F loss of 45,000
>
>
> My reading of Schedule M instructions including the worksheet says the
> Schedule F loss offsets the W-2 income and thus no 800 MWP credit (MFJ).
> Pension income should have no effect.
>
>
> It appears IRS is not offsetting the W-2 with the Sch F loss and giving
> the 800 MWP credit to them.
>
>
> Anyone else seen this or have any comments?

If you don't give them the credit then how you going to keep them down on
the farm?

>
>
>
> --
> CMS VA CPA
>

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