U.S. Individual Income Tax Return

Department of the Treasury
Internal Revenue Service

2010 Instructions for Schedule M (Form 1040A or
1040)
Use Schedule M to figure the making work pay credit. This credit may give you a refund
even if you do not owe tax.
Making Work
Pay Credit
General Instructions
What’s New
Schedule M can no longer be used to take a
government retiree credit. The government
retiree credit was available only for 2009.

Who Can Take the Credit
You may be able to take the credit if you
have earned income from work. The credit
can be as much as $400 ($800 if married
filing jointly).
You cannot take the credit if:

Effect of Credit on Welfare
Benefits
Any refund you receive as a result of the
credit will not be used to determine if you
are eligible for the following programs, or
how much you can receive from them.
• Temporary Assistance for Needy
Families (TANF).
• Medicaid and SSI.
• Supplemental Nutrition Assistance
Program (food stamps) and low-income
housing.
But if the refund you receive because of the
credit is not spent within a certain period of
time, it may count as an asset (or resource)
and affect your eligibility.

• The amount you enter on line 5 of

Schedule M is $95,000 ($190,000 if married filing jointly) or more,
• You are a nonresident alien, or
• You can be claimed as a dependent on
someone else’s return. (If you are married
and claim the making work pay credit on a
2010 joint return, neither you nor your
spouse can be claimed as a dependent on
anyone else’s 2010 return.)

The credit is reduced if you (or your
spouse, if filing jointly) received a $250 economic recovery payment in 2010. See the
instructions for line 10.
Social security number. To take the credit,

you must include your social security number (if filing a joint return, the number of
either you or your spouse) on your return.
A social security number does not include
an identification number issued by the IRS.
Only the Social Security Administration issues social security numbers.

Specific Instructions
Line 1a
Wages. The amount of your wages is gen-

erally the amount reported on line 7 of
Form 1040A or 1040. Wages do not include income from self-employment.
Earned income. If you checked the “No”

box on line 1a, complete the worksheet on
page M-2 and enter on line 1a the amount
you figured using the worksheet. (You
should have checked the “No” box on line
1a if your wages were less than $6,451
($12,903 if married filing jointly) or you
meet one or more of the conditions listed
after “Important” above line 1a.)

Line 1b
Enter on line 1b the total nontaxable combat pay you, and your spouse if filing
jointly, received in 2010. This amount
should be shown in box 12 of Form W-2
with code Q.

M-1
Cat. No. 53119C

Line 5
If you are filing Form 2555, 2555-EZ, or
4563, or are excluding income from Puerto
Rico, enter on line 5 the following total instead of the amount on Form 1040, line 38:
1. Form 1040, line 38, plus
2. Any exclusion of income from Puerto
Rico, plus
3. Any amounts from —
a. Form 2555, lines 45 and 50,
b. Form 2555-EZ, line 18, and
c. Form 4563, line 15.

Line 10
An economic recovery payment is a $250
payment sent to you by the U.S. Treasury if
you received social security benefits or one
of the other types of benefits listed on line
10 during the 3 months shown on line 10.
Most economic recovery payments were issued in 2009, but some were issued in
2010. You may have received an economic
recovery payment in 2010 if you did not get
one in 2009.
Enter only economic recovery
payment(s) received in 2010. Do not enter
any economic recovery payment(s) received in 2009.

Check your records if you are
not sure whether you received
an economic recovery payment
in 2009 or 2010 or go to
IRS.gov. Enter ‘‘making work pay credit’’
in the search box and click on ‘‘Search.’’
Then select “The Making Work Pay Tax
Credit.”

TIP

Earned Income Worksheet — Line 1a

Keep for Your Records

Before you begin:
u If you are claiming the additional child tax credit and have already completed Form 8812, enter on line 1a of
Schedule M the amount from line 4a of your Form 8812. Do not complete the worksheet below.
u Disregard community property laws when figuring the amounts to enter on this worksheet.
u If married filing jointly, add your spouse’s amounts to yours when completing this worksheet.

1. a. Enter the amount from line 7 of Form 1040A or Form 1040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b. Enter the amount of any nontaxable combat pay received. Also enter this amount on Schedule M, line 1b. This
amount should be shown in box 12 of Form(s) W-2 with code Q. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Next, if you are filing Schedule C, C-EZ, F, or SE, or you received a Schedule K-1 (Form 1065 or Form 1065-B),
go to line 2a. Otherwise, skip lines 2a through 2e and go to line 3.
2. a. Enter any statutory employee income reported on line 1 of Schedule C or C-EZ . . . . . . . . . . . . . . . . . . . . . . . . .
b. Enter any net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14,
code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1.* Reduce any Schedule K-1
amounts as described in the instructions for completing Schedule SE in the Partner’s Instructions for Schedule K-1.
Do not include on this line any statutory employee income or any other amounts exempt from self-employment tax.
Options and commodities dealers must add any gain or subtract any loss (in the normal course of dealing in or
trading section 1256 contracts) from section 1256 contracts or related property . . . . . . . . . . . . . . . . . . . . . . . . .
c. Enter any net farm profit or (loss) from Schedule F, line 36, and from farm partnerships,
Schedule K-1 (Form 1065), box 14, code A.* Reduce any Schedule K-1 amounts as described in
the instructions for completing Schedule SE in the Partner’s Instructions for Schedule K-1. Do
not include on this line any amount exempt from self-employment tax . . . . . . . . . . . . . . . . . . 2c.
d. If you used the farm optional method to figure net earnings from self-employment, enter the
amount from Schedule SE, Section B, line 15. Otherwise, skip this line and enter on line 2e the
amount from line 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2d.
e. If line 2c is a profit, enter the smaller of line 2c or line 2d. If line 2c is a (loss), enter the (loss) from line 2c. . . . .
3. Combine lines 1a, 1b, 2a, 2b, and 2e. If zero or less, stop. Do not complete the rest of this worksheet. You do not
qualify for the making work pay credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Enter any amount included on line 1a that is:
a. A scholarship or fellowship grant not reported on Form W-2 . . . . . . . . . . . . . . . . . . . . . . . . . 4a.
b. For work done while an inmate in a penal institution (enter “PRI” and this amount on the dotted
line next to line 7 of Form 1040A or 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4b.
c. A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental
section 457 plan (enter “DFC” and this amount on the dotted line next to line 7 of Form 1040A
or 1040). This amount may be shown in box 11 of your Form W-2. If you received such an
amount but box 11 is blank, contact your employer for the amount received as a pension or
annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4c.
5. a. Enter any amount included on line 3 that is also included on Form 2555, line
43, or Form 2555-EZ, line 18. Do not include any amount that is also
included on line 4a, 4b, or 4c above . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5a.
b. Enter the portion, if any, of the amount from Form 2555, line 44, that you
also included on Schedule E in partnership net income or (loss) or deducted
on Form 1040, line 27; Schedule C; Schedule C-EZ; or Schedule F . . . . . . 5b.
c. Subtract line 5b from line 5a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5c.
6. Enter the amount from Form 1040, line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
7. Add lines 4a through 4c, 5c, and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Subtract line 7 from line 3. Enter the result here and on Schedule M, line 1a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*If you have any Schedule K-1 amounts and you are not required to file Schedule SE, complete the appropriate line(s) of
Schedule SE, Section A. Put your name and social security number on Schedule SE and attach it to your return.

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