I have the same issue. The M2M help balloon says "M2M text are messages to and from one Verizon Network mobile device to another Verizon Network mobile device. These messages are not counted toward message allowance." I can send a text to my daughter, and she can reply. We're both in the same family plan account (according to the bill i pay ), so I think it's certainly "to and from one Verizon Network mobile device to another Verizon Network mobile device".
But all of these txts show up in the ordinary "Text" column in the usage report. None of these txts show up in the M2M column. I always have a zero there.
I did a chat help session, and the person on the other end seemed to say that we only get free txts if we have unlimited txts. We have a 250 limit. I guess you can have M2M messages that "are not counted toward message allowance." only if you do not have a message allowance. Perhaps i misunderstood the verizon rep.