Source: https://de.scribd.com/document/146812112/MI-1040-Booklet
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MI-1040 Booklet | Tax Refund | Income Tax In The United States
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www.mifastfile.org
a E-filing your return is easy, fast, and secure!
a Two-thirds (over 3.6 million) of all Michigan taxpayers choose e-file.
a E-filed returns are usually processed within
business days (see page 4). Please allow
days before checking the status of your
a Tax preparers who complete 11 or more Michigan Individual Income Tax returns are required to e-file all eligible returns supported by their software (see page 4).
a Free e-file is available. Do you qualify?
a Visit Treasury’s Web site at www.MIfastfile.org for a list of e-file resources, how to find an e-file provider, and more information on free e-file services.
This booklet is intended as a guide to help complete your return. It does not take the place of the law.
The Michigan Department of Treasury (Treasury) offers a variety of services designed to assist you, and most are available 24 hours a day, seven days a week.
IMPORTANT: To obtain information about your account using the Internet and Telephone Options listed below, you will need the following information from your return:
• Social Security number (SSN) of the primary filer (the filer listed first on the return)
• Tax year of the return
• Adjusted gross income (AGI) or total household
• Filing status (single, married filing jointly, married filing separately).
Internet Options www.michigan.gov/incometax
Find the following information on this Web site:
• Current year forms and instructions
• Answers to many tax preparation questions
• Most commonly used tax forms
• Free assistance in preparing your return
• Retirement, Pension, Interest, Dividends, Capital Gain Estimator
• Other tax resources.
www.michigan.gov/iit
This secure Web site was designed specifically to protect your personal tax information. Use this Web site to:
• Check the status of your return
• Check estimated payments you made during the year
• Check the status of letters you have sent to Treasury
• Ask a specific question about your account.
Telephone Options (517) 636-4486 Automated Information Service
With Treasury’s automated phone system, you can:
• Request the status of your refund.
• Check the status of letters you have sent to Treasury.
• Request information on estimated payments.
• Order current tax year forms.
While most questions can be answered by the Automated Information Service, customer service representatives are available from 8 a.m. to 4:45 p.m., Monday through Friday.
Assistance is available using TTY through the Michigan Relay Service by calling 1-800-649-3777 or 711. Printed material in an alternate format may be obtained by calling (517) 636-4486.
Find tax forms using the Internet and Telephone Options listed on this page. Commonly used forms are also available at Treasury offices (see back cover), most public libraries, Northern Michigan post offices, and Department of Human Services (DHS) county offices.
Anytime of the night or day, go to
and look for these icons to help find answers to your questions!
Public Act 38 of 2011 significantly amended the Michigan income tax act effective January 1, 2012. Important changes that you should be aware of include the following:
Homestead Property Tax Credit Changes
• Household income replaced by total household resources which exclude net losses from business (including farm), rental and royalties and also excludes net operating losses. See page 23 for additional information.
• Credit is subject to reduction phase-out with total household resources of $41,001 or greater; if your total household resources exceed $50,000 you are not eligible for this credit.
• Senior credit reduction percentage reduced from 100 percent to 60 percent based on total household resources beginning at $21,001.
• Homesteads with a taxable value over $135,000 are not eligible for this credit.
• New homestead status checkbox for homesteads that include unoccupied farmland classified as agricultural.
• MI-1040CR form is now three pages; all three pages must be completed and submitted or your credit cannot be processed.
Decrease in Tax Rate and Increase in Exemption Allowance
This equates to an
annualized rate of 4.33 percent for tax year 2012.
• Effective October 1, 2012, the personal exemption allowance increased from $3,700 to $3,950. annualized exemption allowance of $3,763 for 2012.
Subtraction Changes
• Significant retirement/pension subtraction changes based on taxpayer’s filing status and year of birth, requires inclusion of the new Michigan Pension Schedule (Form 4884). See page 15 for additional information.
• Dividend/interest/capital gains deduction for seniors now available only for those born prior to 1946.
• Removed miscellaneous deductions for political contributions, prizes won in state regulated bingo, raffle, and charity games, and charitable contributions from retirement plans.
• Removed the Venture Capital Deduction.
• Effective October 1, 2012, the income tax rate decreased from 4.35 percent to 4.25 percent.
• May only subtract the net income (instead of gross income beginning in 2012) from Michigan oil and gas royalty interest or working interest that is subject to Michigan severance tax.
Exemptions No Longer Allowed
• Special exemption for seniors age 65 or older
• $600 exemption for children 18 and under
• Special exemption for unemployment compensation equal to at least 50 percent of adjusted gross income
Non-Refundable Credits No Longer Allowed
• Public contribution
• Contributions to homeless shelters, food banks, and community foundations
• Contributions to medical savings accounts
• Contributions to Individual or Family Development Account
• Film credit for wage withholding
• College tuition and fees
• Credit for historic rehabilitation plans certified after December 31, 2011
• Renewable energy surcharge
Refundable Credit Changes
• Reduced Earned Income Tax Credit from 20 percent to 6 percent.
• Removed the Qualified Adoption Expenses Credit.
• Removed the Stillbirth Credit.
• Removed the Energy Efficient Qualified Home Improvement Credit.
Schedule W Change
• Includes a section for Flow-Through Withholding
• Beginning with tax year 2012, amended returns must be filed using form MI-1040X-12. All prior years must use form MI-1040X. Amended returns received using the incorrect form will not be processed.
Throughout this booklet, Treasury refers to adjusted gross income as AGI. When AGI is asked for, copy your AGI directly from your U.S. Form 1040, U.S. Form 1040A, or U.S. 1040EZ.
Tax Rate, Exemption Allowances, and Deductions for Retirees and Seniors
The income tax rate for 2012 is 4.33 percent. For tax year 2012, the personal exemption allowance is $3,763 and the special exemption allowance for deaf, blind, hemiplegic, paraplegic, quadriplegic, or totally and permanently disabled is $2,400. See page 11 for more information. For tax year 2012, retirement/pension benefits included in AGI from a pension or an Individual Retirement Account (IRA) may be deductible. See Form 4884 instructions beginning on page 17 for further details regarding retirement/pension benefit deductions based on year of birth and filing status. Senior citizens age 67 or older may be able to deduct part of their interest, dividends, and capital gains that are included in AGI. For 2012, the deduction is limited to a maximum of $10,545 for single filers and $21,091 for joint filers. See Schedule 1 instructions beginning on page 13 for further details regarding dividend/interest/capital gains deductions.
Small Business Investment Tax Credit (Venture Investment Credit)
The Small Business Investment Tax Credit (Venture Investment Credit) provides Qualified Investors a 25 percent tax credit over a two year period on Qualified Investments in Qualified Businesses. To qualify, investments had to be made after December 31, 2010 and before January 1, 2012. Taxpayers eligible for this credit received a certificate from the Michigan Strategic Fund Board, Small Business Investment Tax Credit Program. The certificate must be attached to the taxpayer’s return.
United States military personnel serving in a combat zone on April 15, 2013, will be given 180 days after leaving the combat zone to file their federal and State tax returns and will be exempt from penalties and interest. When e-filing, service men and women serving in combat zones should enter the words “Combat Zone” in the preparer notes. When filing a paper return, print “Combat Zone” in ink on the top of page 1 of the MI-1040.
Appeals of Adjusted Refunds or Credits
Taxpayers have 60 days from the issuance of refund denials, refund adjustments, or Treasury decisions (other than final assessment), that may be appealed under Section 22 of the Revenue Act, to request informal conferences.
Choose e-file Instead of Paper Returns. Get Your Refund Fast!
E-filing eliminates many of the errors that lengthen processing times. E-file returns are usually processed within 14 days. Tax preparers who complete 11 or more income tax returns are required to e-file all eligible returns. Visit Treasury’s Web site at www.MIfastfile.org for a list of e-file resources, how to find an e-file provider, and more information on free e-file services. When e-filing, do not mail a paper copy of your return.
A reminder from the Internal Revenue Service (IRS). Michigan homestead property tax credit and homestead exemption refunds received in 2012 may be taxable on your 2012 U.S. Form 1040. If you claimed an itemized deduction for property taxes on your 2011 U.S. Form 1040 and then received a refund in 2012 from the State or your local unit of government for a portion of those taxes, you must include that refund as income on your 2012 U.S. Form 1040. If you have questions about the taxability (for federal tax purposes) of the refunds, call the IRS at 1-800-829-1040.
What You Should Know About Your Michigan 1099-G
If you itemized deductions on your 2011 federal income tax return and received a Michigan tax refund in 2012, you will be mailed a 2012 Michigan 1099-G in early 2013 that shows the amount of your 2011 refund that was issued in 2012. The refund amount will include any amounts credited forward to 2012 estimated tax, prior year refunds issued in 2012, refund amounts intercepted for back tax assessments or other debts (such as child support or court-ordered garnishments), and any portion of a refund assigned to pay use tax or any amount you contributed as a voluntary contribution. The refund amount will not include homestead property tax credits, earned income tax credits, or other refundable tax credits claimed on your MI-1040. The 1099-G IS NOT A BILL. Visit www.michigan.gov/taxes for more information about your Michigan 1099-G.
A Note About Debts
By law, any money you owe to the state and other state agencies must be deducted from your refund or credit before it is issued. Debts include money you owe for past- due taxes, student loans, child support due the Friend of the Court, an IRS levy, money due a State agency, a court- ordered garnishment, or other court orders. Taxpayers who are married, filing jointly, may receive an Income Allocation
to Non-Obligated Spouse (Form 743) after the return is filed. Completing and filing this form may limit the portion of the refund that can be applied to a debt. If Treasury applies all or part of your refund to any of these debts, you will receive a letter of explanation.
File a return if you owe tax, are due a refund, or your AGI exceeds your exemption allowance. You should also file a Michigan return if you file a federal return, even if you do not owe Michigan tax. This will eliminate unnecessary correspondence from Treasury. If your parents (or someone else) can claim you as a dependent on their return and your AGI is $1,500 or less if single or married filing separately or $3,000 or less if filing a joint return, you do not need to file a return unless you are claiming a refund of withholding.
Important: If your income subject to tax (MI-1040, line 14) is less than your personal exemption allowance (line 15) and Michigan income tax was withheld from your earnings, you must file a return to claim a refund of the tax withheld.
Who Must File a Joint Return
File a joint Michigan return if you filed a joint federal return. If you and your spouse filed separate federal returns, you may file separate or joint Michigan returns. You may file a joint return only with your spouse.
Always complete your federal tax return before your Michigan return. You may file a Michigan return even if you are not required to file a federal return.
Your return must be postmarked no later than April 15, 2013, to be considered timely. Payment must be included with your return. Make your check payable to “State of Michigan” and write your Social Security number(s) and “2012 income tax” on the front of the check. To avoid penalty and interest, if you owe tax, postmark no later than April 15, 2013. If you cannot file before the due date and you owe tax, you may file an Application for Extension of Time to File Michigan Tax Returns (Form 4) with your payment. This allows an extension of time to file, but not to pay. Payment is due no later than April 15, 2013, otherwise penalty and interest may apply. See page 7. If you are due a refund, you must file a return within four years of the due date to obtain the refund. Keep a copy of your return and all supporting schedules for six years.
Penalty and Interest Added for Filing and Paying Late
If you file and pay late, Treasury will add a penalty of 5 percent of the tax due. After the second month, penalty will increase by an additional 5 percent per month, or fraction thereof, up to a maximum of 25 percent of the tax due. If you pay late, you must add penalty and interest to the amount due. The interest rate through June 30, 2013, is 4.25 percent. For interest rates after June 30, 2013, visit www.michigan.gov/taxes or call (517) 636-4486.
Certain Renaissance Zones, along with the tax benefits, will continue to phase out. See instructions for Schedule 1, line 15, on page 14.
How to Complete and File Paper Returns
Completing Michigan Forms
Treasury captures the information from paper income tax returns using an Intelligent Character Recognition (ICR) process. If completing a paper return, avoid unnecessary delays by following the guidelines below so your return is processed quickly and accurately.
• Use black or blue ink. Do not use pencil, red ink, or felt tip pens. Do not highlight information.
• Print using capital letters (UPPER CASE). Capital letters are easier to recognize.
• Print numbers like this: 0123456789
Do not put a slash through the zero ( ) or seven ( ).
• Fill check boxes with an [X]. Do not use a check mark.
• Leave lines/boxes blank if they do not apply or if the amount is zero unless otherwise directed.
• Do not write extra numbers, symbols, or notes on the
return, such as cents, dashes, decimal points, commas, or
dollar signs. Enclose any explanations on a separate sheet unless you are instructed to write explanations on the return.
• Stay within the lines when entering information in
• If a form is multiple pages, all pages must be filed.
• Report all amounts in whole dollars. Round down
amounts of 49 cents or less. Round up amounts of 50 cents
or more. If cents are entered on the form, they will be treated as whole dollar amounts.
If the tax preparer is someone other than the taxpayer, he or she must enter the business name and address of the firm he or she represents and Preparer Tax Identification Number (PTIN), Federal Employer Identification Number (FEIN), or Social Security Number. Check the box to indicate if Treasury may discuss your return with your tax preparer.
Assemble your returns and attachments and staple in the upper-left corner. Do not staple your check to your return.
A sequence number is printed in the upper-right corner of
the following Michigan forms to help you assemble them
in the correct order behind your MI-1040:
• Additions and Subtractions (Schedule 1)
• Nonresident and Part-Year Resident (Schedule NR)
• Farmland Preservation Tax Credit (MI-1040CR-5)
• Schedule of Taxes and Allocation to Each Agreement (Schedule CR-5)
• Property Tax Credit (MI-1040CR or MI-1040CR-2)
• Federal Schedules (see Table 3, page 59)
• Schedule of Apportionment (MI-1040H)
• Underpayment of Estimated Income Tax (MI-2210)
• Withholding Tax Schedule (Schedule W)
• Adjustments of Capital Gains and Losses (MI-1040D)
• Adjustments of Gains and Losses From Sales of Business Property (MI-4797)
• Voluntary Contributions Schedule (4642)
• Sales and Other Dispositions of Capital Assets (MI-8949)
• Pension Schedule (4884)
• Pension Continuation Schedule (4973)
If you are also filing a Home Heating Credit Claim (MI-1040CR-7), do not staple it to your return; fold it and leave it loose in the envelope. Important Reminder: If you do not include all the required attachments with your return, your refund may be reduced, denied, or delayed. Send original forms. Do not send photocopies. Do not staple multiple prior year returns together.
Mail refund, credit, or zero due returns to:
Michigan Department of Treasury Lansing, MI 48956 If you owe tax, mail your return to:
Michigan Department of Treasury Lansing, MI 48929
Make your check payable to “State of Michigan” and print your Social Security Number and “2012 income tax” on the front of your check. To ensure accurate processing of your return, send one check for each return type. Do not staple your check to your return. Do not mail your 2012 return in the same envelope with a return for years prior to 2012; mail your 2012 return in a separate envelope.
• Missing pages. The MI-1040, MI-1040CR, MI-1040CR-2, MI-1040CR-7, MI-1040X-12 and MI-1040X are multiple-page forms. All pages must be completed and submitted for Treasury to process the form timely. • Using correct tax year forms. Appropriate tax year
forms must be filed (e.g., do not use a 2011 form to file your 2012 return). • Schedules received alone. If the following forms are filed, they must be submitted with a completed MI-1040:
○ Additions and Subtractions (Schedule 1)
○ Nonresident and Part-Year Resident (Schedule NR)
○ Withholding Tax Schedule (Schedule W) – attach a copy if reporting Michigan withholding
○ Adjustments of Capital Gains and Losses
(MI-1040D)
○ Adjustments of Gains and Losses from Sales of Business Property (MI-4797)
○ Voluntary Contributions Schedule (4642)
○ Sales and Other Dispositions of Capital Assets
(MI-8949)
○ Historic Preservation Credit (3581)
○ Pension Schedule (4884)
○ Pension Continuation Schedule (4973)
• Missing, incomplete, or applied for Social Security number. If you don’t have an Social Security number or an Individual Taxpayer Identification Number (ITIN), apply for one through the IRS. Do not file your Michigan return until you have received your SSN or ITIN.
To request more time to file your Michigan tax return, send a payment of your estimated tax to Treasury with
a copy of your federal extension (U.S. Form 4868) on or
before the original due date of your return. Treasury will extend the due date to your new federal due date. If you do not have a federal extension, file an Application for Extension of Time to File Michigan Tax Returns (Form 4) with your payment. Treasury will not notify you of approval. Do not file an extension if you will be claiming a refund. An extension of time to file is not an extension of time to pay. If you do not pay enough with your extension request, you must pay interest on the unpaid amount. Compute interest from the original due date of the return. Interest is 1 percent above the prime rate and is adjusted on July 1 and January 1. You may be charged a penalty of 10 percent or more if the balance due is not paid with your extension request.
When you file your MI-1040, include on line 30 the amount of tax you paid with your extension request. Attach
a copy of your federal or state extension to your return.
Usually, you must make estimated income tax payments
if you expect to owe more than $500 when you file your
2013 MI-1040. This is after crediting the property tax, farmland, any other refundable or nonrefundable credits, and amounts you paid through withholding. Common income sources which make estimated payments necessary are self-employment income, salary, wages, or retirement benefits if you do not have enough tax withheld, tips, lump sum payments, unemployment benefits, dividend and interest income, income from the sale of property (capital gains), business income and rental income.
You may ask your employer to increase your withholding to cover the taxes on other types of income.
Estimated payments are due April 15, 2013; June 17, 2013; September 16, 2013; and January 15, 2014. If you are a fiscal year filer, the due dates are the same as your federal estimated payment due dates. If you filed estimates for 2012, Treasury will send you personalized forms for 2013, unless you used a tax preparer. If you do not receive personalized forms, use a tax preparer, or use tax preparation software to complete your return, you can obtain a Michigan Estimated Individual Income Tax Voucher (MI-1040ES) from Treasury’s Web site. Exceptions. If you expect to owe more than $500, you may not have to make estimated payments if you expect your 2013 withholding to be at least:
• 90 percent of your total 2013 tax, or
• 100 percent of your total 2012 tax.
Total 2012 tax is the amount on your 2012 MI-1040, line 21, less the amount on lines 25, 26, 27b and 28.
NOTE: 2013 estimates for taxpayers with 2012 AGI of $150,000 or more for joint or single filers ($75,000 or more for married filing separate) must equal 90 percent of the current year’s liability or 110 percent of the previous year’s liability. Farmers, fishermen, seafarers or retirees may have to pay estimates, but have different filing options. If at least two-thirds of your gross income is from farming, fishing, or seafaring, you may:
• Delay paying your first 2013 quarterly installment
(MI-1040ES) until as late as January 15, 2014, and pay the entire amount of your 2013 estimated tax due, or
• File your 2013 MI-1040 return and pay the entire
amount of tax due on or before March 1, 2014. You are considered a farmer or fisherman if you file U.S. Schedule F or Schedule C. Wages earned as a farm employee or from a corporate farm do not qualify you for this exception. You are considered a seafarer if your wages are exempt from income tax withholding under Title 46, Shipping, USC, Sec. 11108. Retirees who owed $500 or less on their 2011 return (or filed no 2011 return because they had no filing obligation) should check the box on line 6 of the MI-1040.
Failure to make payments or underpayment of estimates.
If you fail to make required estimated payments, pay late,
or underpay in any quarter, Treasury may charge penalty and interest. Penalty is 25 percent of the tax due (with a minimum of $25) for failing to file estimate payments or 10 percent (with a minimum of $10) for failing to pay enough with your estimates or paying estimates late. Interest is 1 percent above the prime rate and is computed
monthly. The rate is adjusted on July 1 and January 1.
Resident. You are a Michigan resident if Michigan is your permanent home. Your permanent home is the place you intend to return to whenever you go away. A temporary absence from Michigan, such as spending the winter in a southern state, does not make you a part-year resident.
Income earned by a Michigan resident in a nonreciprocal state (see “Reciprocal States” on page 8) or Canadian province is taxed by Michigan, and may also be taxed by the other jurisdiction. If you pay tax to both, you can claim
a credit on your Michigan return. See instructions for MI-1040, line 18 and the example on page 12.
Part-year resident. You are a part-year resident if, during the year, you move your permanent home into or out of Michigan. You must pay Michigan income tax on income you earned, received, or accrued while living in Michigan. Use Michigan Nonresident and Part-Year Resident Schedule (Schedule NR) and the following guidelines to help figure your tax:
• Allocate your income from the date you moved into or out of Michigan.
• Bonus pay, severance pay, deferred income, and any
other amount accrued while a Michigan resident are subject to Michigan tax no matter where you lived when you received it.
• Deferred compensation reported to you on U.S. Form
1099-R and dividend and interest income are allocated to the state of residence when received.
• Part-year residents who lived in Michigan at least six
months of the tax year may qualify for a homestead property tax credit (see page 25). Note: Out-of-state students who live in Michigan while they are attending school are not considered Michigan residents or part-year residents and should file as nonresidents. Nonresident. Use Schedule NR to figure your Michigan taxable income. You must pay Michigan income tax on the following types of income:
• Salary, wages, and other employee compensation for
work performed in Michigan, unless you live in a state
covered by a reciprocal agreement (see “Reciprocal States” below).
• Net rents and royalties from real and tangible personal
property in Michigan.
• Capital gains from the sale or exchange of real property located in Michigan, or of tangible personal property
• Patent or copyright royalties if the patent or copyright is used in Michigan or if you have a commercial domicile in Michigan.
• Income (including dividend and interest income) from an S corporation, partnership or an unincorporated business, or other business activity in Michigan.
Prizes won from casinos or licensed horse tracks located
Michigan. Nonresidents from reciprocal states must also
declare these prizes as taxable.
Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin have reciprocal agreements with Michigan. Michigan residents pay only Michigan income tax on
their salaries and wages earned in any of these states.
A Michigan resident may file a withholding form with
an employer in a reciprocal state to claim exemption from that state’s income tax withholding. The out-of- state income may make Michigan income tax estimate payments necessary. Residents of reciprocal states working in Michigan do not have to pay Michigan tax on salaries or wages earned in Michigan but do have to pay Michigan tax on business income earned from business activity in Michigan. A resident of a reciprocal state who claims a refund of Michigan withholding tax must file a Schedule NR along with an MI-1040.
A personal representative for the estate of a taxpayer who
died in 2012 (or 2013 before filing a 2012 return) must file
if the taxpayer owes tax or is due a refund. A full-year
exemption is allowed for a deceased taxpayer on the 2012
MI-1040.
Use the decedent’s Social Security number and your address. If the taxpayer died after December 31, 2011, check the appropriate box(es) in the “Deceased Taxpayers” section on the bottom of page 2 on the 2012 MI-1040.
The surviving spouse may file a joint return for 2012. Write your name and the decedent’s name and both Social Security numbers on the MI-1040. Write “DECD” after the decedent’s last name. You must report the decedent’s income. Sign the return. In the deceased’s signature line, write “Filing as surviving spouse.” If the taxpayer died after December 31, 2011, check the appropriate box(es) on page 2 of the MI-1040. See “Deceased Taxpayer Chart of Examples” on page 59, example A. If filing as a personal representative or claimant and you are claiming a refund for a single deceased taxpayer, you must attach a U.S. Form 1310 or Michigan Claim for Refund Due a Deceased Taxpayer (MI-1310). Enter the decedent’s name in the Filer’s Name lines and the representative’s or claimant’s name, title, and address in the Home Address line. See “Deceased Taxpayer Chart of Examples” on page 59, example B or C. If filing as a personal representative or claimant of a deceased taxpayer(s) for a jointly filed return, you must attach a U.S. Form 1310 or Michigan Claim for a Refund Due a Deceased Taxpayer (MI-1310). Enter the names of the deceased persons in the Filer’s and Spouse’s Name lines and the representative’s or claimant’s name, title, and address in the Home Address line. See “Deceased Taxpayer Chart of Examples” on page 59, example D or E. For information about filing a credit claim, see “Deceased Claimant’s Credit” on page 25.
If you need to make a correction to your 2012 return, file
a Michigan 2012 Amended Individual Income Tax Return
(MI-1040X-12). If you need to make a correction to your
2011 or prior year return, file a Michigan Amended Individual Income Tax Return (MI-1040X). If you are due
a refund on your amended return, you must file it within four years of the due date of the original return.
If a change on your federal return affects Michigan taxable
income, you must file an MI-1040X-12 or MI-1040X within 120 days of the change. Include payment of any tax and interest due. To amend only a homestead property tax or home heating credit, file a revised claim form clearly marked “Amended.” Do not file an MI-1040X-12 or MI-1040X.
If you have a federal NOL deduction, you must add back the federal deduction on your Michigan Schedule 1, line 6, to the extent included in federal AGI. A subtraction for a Michigan NOL deduction may be claimed on Michigan Schedule 1, line 19, and is calculated on page 1 of Application for Michigan Net Operating Loss Refund (MI-1045). Compute your Michigan NOL and Michigan NOL deduction by completing the MI-1045. File an MI-1045 to claim a refund for a carryback deduction. Returns for tax years affected by carryforward deductions must have an MI-1045 attached to substantiate the deduction.
Repayments of Income Reported in a Prior Year
If you had to repay money in 2012 that you claimed as income in a previous year (e.g., unemployment benefits), you may be entitled to a credit on your 2012 return for the tax paid in an earlier year.
If you subtracted the repayment in arriving at AGI, no additional credit is allowed on the Michigan return because your income for the year has been reduced by the repayment amount. If the amount of the repayment was deducted on U.S. Schedule A or a credit was claimed on U.S. Form 1040, a credit will be allowed on the Michigan return. To compute your Michigan credit, multiply the amount you repaid in 2012 by the tax rate which was in effect the year you paid the tax. Then add the amount of the credit to the Michigan tax withheld on MI-1040, line 29. Write “Claim of Right/Repayment” next to line 29. Attach a schedule showing the computation of the credit, proof of the repayment, and pages 1 and 2 of your U.S. Form 1040 and Schedule A if applicable.
Every state that has a sales tax has a companion tax for purchases made outside that state by catalog, telephone, or Internet. In Michigan, that companion tax is called “use tax,” but might be described more accurately as a remote sales tax because it is a 6 percent tax owed on purchases made outside of Michigan. Use tax is due on catalog, telephone, or Internet purchases made from out-of-state sellers as well as purchases while traveling in foreign countries when the items are to be brought into Michigan. Use tax must be paid on the total price (including shipping and handling charges).
How to Report Use Tax
Use Worksheet 1 below to calculate your use tax and enter the amount of use tax due on MI-1040, line 23.
Line 1: For purchases of $0 to $1,000, multiply your total purchases times 6 percent (0.06) and enter the amount on Line 1, or
If you have incomplete or inaccurate receipts to calculate your purchases, you may use “Table 1 - Use Tax” to estimate your taxes (see the following example).
Line 1 should contain a number unless you made no purchases under $1,000 subject to the use tax. If Treasury later determines that you owe use tax, you may be subject to penalty and interest.
Line 2: In all cases, if a single purchase is $1,000 or more, you must pay 6 percent use tax on those purchases.
Example: Jacob ordered a computer from a catalog retailer in New York for $1,437.50. Jacob also purchased items over the Internet for less than $1,000 during the year, but lost his receipts. He is sure he did not pay Michigan sales tax. Jacob’s AGI is $46,500. Jacob would complete Worksheet 1 as follows:
Line 1: Jacob selects $36 from the table based on his AGI
Line 2: Jacob enters $1,437.50 x 6 percent
Line 3: Total use tax due
Jacob would enter $122 (no cents) on his 2012 MI-1040, line 23.
Estimating your taxes does not preclude Treasury from auditing your account. If additional tax is due, you may receive an assessment for the amount of the tax owed, plus applicable penalty and interest.
Use Tax on the Difference
If you paid at least 6 percent to another state on your purchase, you do not owe use tax to Michigan. If you paid less than 6 percent, you owe the difference.
Note: The full 6 percent use tax is also owed on purchases made in a foreign country.
For more information, visit www.michigan.gov/taxes.
TABLE 1 - USE TAX
AGI by
0.08% (0.0008)
* AGI from MI-1040, line 10.
WORKSHEET 1 - USE TAX Line 1: Itemized purchases of $0 to $1,000 x 6 percent (0.06) OR “Table 1 - Use Tax” amount
Line 2: Single purchases $1,000 or more x 6 percent (0.06)
Line 3: Total Use Tax Due (add Lines 1 and 2)
Enter amount from Line 3 above on your 2012 MI-1040, line 23. If the amount on Line 3 is 0, enter “0” on your 2012 MI-1040, line 23.
Summary of Income Tax Credits, Additions, and Subtractions
Below is a summary of income tax credits, additions, and subtractions available to taxpayers. Detailed information for each is provided on the page number indicated below.
The following refundable credits may be claimed on your MI-1040. The line reference follows the credit listed below.
MI-1040 - Nonrefundable Credits
Taxes paid to government units outside Michigan (18)
Historic Preservation Tax Credit (19)
Small Business Investment Tax Credit (19)
MI-1040 - Refundable Credits
Homestead Property Tax Credit (25)
Farmland Preservation Tax Credit (26)
Earned Income Tax Credit (27)
Historic Preservation Tax Credit (28)
The following credit is claimed on your MI-1040CR-7 Home Heating Credit Claim form.
See MI-1040CR-7 Instruction Booklet
The following additions are claimed on your Michigan Schedule 1; total additions are carried forward to your MI-1040, line 11. The Schedule 1 line reference follows the addition listed below.
Gross interest, dividends, and income from obligations or securities of states and their political subdivisions other than Michigan (1)
Deduction taken on your federal return for self-employment tax or other taxes on or measured by income (2)
Capital gains from the Michigan column of the MI-1040D or MI-4797 (3)
Certain losses from a business or property located in another state (4)
Net loss from the federal column of your Michigan MI-1040D or MI-4797 (5)
Money withdrawn in the tax year from a Michigan Education
Savings Program (MESP) account if the withdrawal was not a
qualified withdrawal as provided in the MESP Act (6)
Net operating loss deduction used to reduce AGI (6)
Refund received from a Michigan Education Trust (MET) contract (6)
Gross expenses from Michigan oil and gas activity
The following subtractions are claimed on your Michigan Schedule 1; total subtractions are carried forward to your MI-1040, line 13. The Schedule 1 line reference follows the subtraction listed below.
Income from U.S. government obligations (Series EE Bonds, Treasury notes, etc.) (8) Compensation received for active duty in U.S. Armed Forces (9) Gains from federal column of Michigan MI-1040D and MI-4797 (10) Income attributable to another state (11)
Qualifying retirement and pension benefits (12). See Pension Schedule (Form 4884) Dividends, interest, and capital gains for senior citizens (13) Taxable Social Security and Tier 1 railroad benefits (14)
Renaissance zone deduction (15)
Michigan state and city income tax refunds and homestead property tax credit refunds (16)
Contributions made to accounts established through MESP (17)
Contract price for a MET contract (18)
Charitable contributions to MET programs (18)
Michigan NOL deduction (19)
Amount used to determine the credit for elderly or totally and permanently disabled from U.S. Form 1040 Schedule R (20)
Holocaust victim payments (20)
Gross income from Michigan oil and gas activity (20)
Line-by-Line Instructions for MI-1040, Individual Income Tax Return
Lines not listed are explained on the form. Line 1: Only married filers may file joint returns. Include name and address. Lines 2 and 3: Print your Social Security numbers. Line 5: State Campaign Fund. These funds are disbursed only to candidates for governor, regardless of political party, who agree to limit campaign spending and meet the campaign fund requirements. Checking the box will not raise your tax or reduce your refund.
Line 6: Farmers, fishermen, or seafarers may have to pay estimates, but have different filing options. If at least two-thirds of your gross income is from farming, fishing,
or seafaring, check this box. Retirees who owed $500 or
less on their 2011 return (or filed no 2011 return because they had no filing obligation) should check this box. (For estimate filing information, see page 7).
Line 7: Filing Status. Check the box to identify your filing status. If you file a joint federal return, you must file a joint Michigan return and you generally cannot be claimed as a dependent on another person’s tax return. Married couples who file separate federal returns may file a separate or joint Michigan return. If your status is married filing separately (box c), print your spouse’s full name in the space provided and be sure to print his or her Social Security number on line 3. If you filed your federal return as head of household or qualifying widow(er), you must file the Michigan return as single. NOTE: If you are claiming a homestead property tax credit or home heating credit and you lived with your spouse, it may be easier to file a joint Michigan return because joint total household resources are the basis for computing these credits. Line 8: Residency. Check the box that describes your Michigan residency for 2012. If you and your spouse had a different residency status during the year, check a box for each of you. Both part-year residents and nonresidents must file Nonresident and Part-Year Resident Schedule (Schedule NR). For definition of residency, see page 7. Line 9: Exemptions. Use this line to compute your Michigan exemption amount plus your Michigan special exemptions. Line 9a: Enter the number of exemptions you claimed on your U.S. Form 1040 or 1040A. These exemptions are for you, your spouse (if filing jointly), and your dependents. Multiply the number of exemptions by your exemption allowance of $3,763 and enter that amount in the box. Exemptions. Complete the lines that apply to you, your spouse, or dependents as of December 31, 2012. If your dependent files a separate return, you and your dependent may not both claim the special exemption. Line 9b: Deaf, Blind, or Disabled. You qualify for this exemption if you are deaf, blind, hemiplegic, paraplegic, quadriplegic, or totally and permanently disabled. Deaf means the primary way you receive messages is through
a sense other than hearing (e.g., lip reading or sign
language). Blind means your better eye permanently has 20/200 vision or less with corrective lenses, or your
peripheral field of vision is 20 degrees or less. Totally and permanently disabled means disabled as defined under Social Security Guidelines 42 USC 416. If you are age 66 or older, you may not claim an exemption as totally and permanently disabled. You may claim only one exemption per person in this category. Line 9c: Qualified Disabled Veterans. A taxpayer may claim an exemption of $300 in addition to the taxpayer’s other exemptions if (a) the taxpayer or spouse is a qualified disabled veteran, or (b) a dependent of the taxpayer is a qualified disabled veteran. To be eligible for the additional exemption an individual must be a veteran of the active military, naval, marine, coast guard, or air service who received an honorable or general discharge and has a disability incurred or aggravated in the line of duty as described in 38 USC 101(16). This additional exemption may not be claimed on more than one tax return.
Line 9d: If someone else can claim you as a dependent, check the box, enter 0 on line 9a and enter $1,500 on line 9d. If your AGI is less than $1,500 and you had no Michigan income tax withheld from your wages, you do not need to file this form. Line 10: Adjusted Gross Income. Enter your AGI from your federal return. This is the amount from your U.S. Form 1040, U.S. Form 1040A, or U.S. Form 1040EZ. You must attach copies of federal schedules that apply to you (see Table 3, page 59). For Michigan adjustments to AGI, see Schedule 1, page 37. Instructions for completing Schedule 1 begin on page 13. Line 17: Tax. Multiply the amount on line 16 by 4.33 percent (0.0433).
Line 18: Income Tax Imposed by Government Units Outside Michigan. Include the amount of income tax paid to:
• A nonreciprocal state (see page 8).
• A local government unit outside Michigan, including
tax paid to local units located in reciprocal states.
• The District of Columbia.
• A Canadian province.
Include only income tax paid to another government unit(s) on income earned while you were a Michigan resident and taxed by Michigan. For assistance with calculating this credit, an estimator can be found at www.michigan.gov/incometax.
Do not include taxes paid on income you subtracted on lines 8 through 20 of Michigan Schedule 1 (e.g., rental or business income from another state, part-year resident wages, etc.). If you claim credit for Canadian provincial tax, you must file a Michigan Resident Credit for Tax Imposed by a Canadian Province (Form 777). Attach copies of your Canadian Federal Individual Tax Return (Form T-1), Canadian Form T-4, U.S. Form 1116, and U.S. Form 1040. Your credit is limited to the portion of your Canadian provincial tax not used as a credit on your U.S. Form 1040.
Line 18b: Credit amount. If more than one government unit is involved, compute the credit amount for each government unit separately. Then add the individual credit amounts and enter the total on line 18b. Compute your allowable credit as follows:
Step 1: Divide your non-Michigan income subject to tax by both states by your total income subject to Michigan tax (MI-1040, line 14); then
Step 2: Multiply the amount of tax shown on MI-1040, line 17, by the resulting percentage.
Your credit cannot exceed the smaller of: (1) the amount of tax imposed by another government; or (2) the amount of Michigan tax due on salaries, wages, and other personal compensation earned in another state. See the example below.
Example: Computing Michigan resident’s credit for tax imposed by another state.
Hunter is a Michigan resident and has $40,000 of Michigan wages, $10,000 of wages earned in another state, and $3,000 in interest and dividends. Hunter’s federal AGI is $53,000. He has no Michigan adjustments (additions or subtractions) to AGI. After subtracting his $3,763 exemption from $53,000 income subject to tax, Hunter’s taxable income is $49,237 (MI-1040, line 16). The other state imposed $700 tax on the $10,000 Hunter earned in that state. To compute the credit, determine the following:
Step 1: Determine Hunter’s Michigan income tax: $49,237 x 4.33% (MI-1040, line 17) = $2,132
Step 2: Calculate the percentage of non-Michigan income to total income subject to tax ($10,000/$53,000) = 19%
Step 3: Multiply Michigan tax of $2,132 by 19% = $405
Step 4: Enter tax imposed by the other state, $700, on MI-1040, line 18a.
Step 5: Credit allowed is $405, the lesser of $405 and $700 (enter on MI-1040, line 18b).
Line 19: Michigan Historic Preservation Tax Credit. Taxpayers eligible for this credit will have received a certificate from the State Historic Preservation Office
indicating their eligibility. To claim this credit you must submit all of the supporting documentation. For a list of required forms see the instructions on the back of Form
Line 19a: Enter the amount from your 2012 Form 3581, line 9.
Line 19b: Enter the amount from your 2012 Form 3581, line 14.
Line 19: Small Business Investment Tax (Venture Investment) Credit. See page 4 for additional information regarding this credit.
Line 19a: Enter the contribution amount or investment amount from the required certificate.
Line 19b:
required certificate. Line 20: Income Tax. Carry this amount to line 21. Line 22: Voluntary Contributions. Contribution amounts can be made on the Voluntary Contribution Schedule (Form 4642). Attach Form 4642 to ensure your contributions are applied to the fund(s) of your choice. Contributions will increase your tax due or reduce your refund. Line 23: Use Tax. Enter use tax due from Worksheet 1, line 3, on page 9. Line 25: Property tax credit information begins on page 23. Line 26: Farmland preservation credit applies to farmers only. See MI-1040CR-5 instructions for additional information. Line 27: Michigan Earned Income Tax Credit (EITC). Taxpayers who are eligible to claim an EITC on their federal return may claim a Michigan EITC equal to 6 percent of the taxpayer’s federal credit. To claim the Michigan credit, enter your federal EITC amount on line 27a and six percent of line 27a on line 27b. Line 28: Michigan Historic Preservation Tax Credit. Enter the amount from your 2012 Historic Preservation Tax Credit (Form 3581), line 16a or 16b, whichever applies. Attach a completed Form 3581 and U.S. Form 3581, if applicable. Line 29: Enter the total Michigan tax withheld (from your Schedule W). If applicable, include any credit for repayments under the “Claim of Right.” See “Repayments of Income Reported in a Prior Year” on page 8. Line 30: Enter the total estimated tax paid with your 2012 MI-1040ES, the amount paid with a Form 4, and the amount of your 2011 overpayment carried forward to this year’s tax (2011 MI-1040, line 36).
Line 32: You Owe. If line 31 is less than line 24, enter the difference. This is the tax you owe with your return. You will owe penalty and interest for late payment of tax if you pay after the due date. Penalty accrues monthly at
Enter the income tax credit amount from the
percent of the tax due, and increases by an additional
percent per month, or fraction thereof, after the second
month, up to a maximum of 25 percent of the tax due (e.g., penalty on a $500 tax due will be $125 if the tax is unpaid for six months). See “Penalty and Interest Added for Filing and Paying Late” on page 5. Add penalty and interest to your tax due and enter the total on line 32. Generally, if you owe more than $500, you are required to make estimated payments. See special note below and information about estimated payments on page 7. If the balance due is less than $1, no payment is required, but you must still file your return. See “Pay” address on page 2 of your MI-1040.
Special note for people required to file estimates. You may owe penalty and interest for underpayment, late payment, or for failing to make estimated tax payments. Use the Michigan Underpayment of Estimated Income Tax (Form MI-2210) to compute penalty and interest. If you do not file an MI-2210, Treasury will compute your penalty
and interest and send you a bill. If you annualize your income, you must complete and attach an MI-2210. Enter the penalty and interest amounts on the lines provided. Line 35: Refund. This includes any tax you overpaid and any credits due you. The state does not refund amounts less than $1. Mail your return to the “Refund, credit, or zero returns” address on page 2 of your MI-1040.
First check with your financial institution to (1) make sure it will accept Direct Deposit, (2) obtain the correct Routing Transit Number (RTN) and account number, and (3) if applicable, verify that your financial institution will allow a joint refund to be deposited into an individual account.
Direct Deposit requests associated with a foreign bank account are classified as International ACH Transactions (IAT). If your income tax refund Direct Deposit is forwarded or transferred to a bank account in a foreign country your Direct Deposit will be returned to Treasury. If this occurs, your refund will be converted to a check (warrant) and mailed to the address on your tax return. Contact your financial institution for questions regarding the status of your account.
a. RTN. Enter the nine-digit RTN. The RTN is usually found between the symbols |: and |: on the bottom of your check. The first two digits must be 01 through 12 or 21 through 32.
b. Account Number. Enter your financial institution account number up to 17 characters (both numbers and letters).
The account number is usually found immediately to the right of the RTN on the bottom of your check. Include hyphens but omit spaces and special symbols. Do not include the check number.
Account. Check the box for checking or
c. Type of savings.
Sign Your Return. Each spouse must sign a joint return. If the tax preparer is someone other than the taxpayer, he or she must include the name and address of the firm he or she represents and tax preparer tax identification or federal employer identification number. Check the box to indicate if Treasury may discuss your return with your preparer.
Signing a child’s return. If a return is prepared for a child who is too young to sign it, a parent or guardian should sign the child’s name, then add “by (your name) parent (or guardian) for minor child.”
Attachments. Attach all your credit claims and required Michigan and federal schedules (see Table 3 on page 59).
If you owe tax. Make your check payable to “State of Michigan.” Print your Social Security number and “2012 income tax” on the front of your check. If paying on behalf of another taxpayer, write the taxpayer’s name and Social Security number on the check. Enclose your payment but do not staple it to the return. Checks stapled to the back of the return may not be seen and may result in improper processing.
The filing deadline to receive a refund for tax year 2012 is April 17, 2017.
Line 1: Enter gross interest, dividends, and income from obligations or securities of states and their political subdivisions other than Michigan. Add this income even if it comes to you through a partnership, S corporation, estate, or trust. You may reduce this income by related expenses not allowed as a deduction by Section 265(a)(1) of the Internal Revenue Code (IRC). Line 2: Enter the deduction taken for self-employment tax on your federal return and for other taxes on or measured by income, such as your share of city income tax paid by partnerships or S corporations, or your share of the taxes paid by an estate or trust. Line 3: Use Michigan Adjustments of Capital Gains and Losses (MI-1040D) and related Michigan Sales and Other Dispositions of Capital Assets (MI-8949) only if you have capital gains or losses attributable to: (1) an election to use Section 271 treatment for property acquired before October 1, 1967; (2) the sale or exchange of U.S. obligations which cannot be taxed by Michigan; or (3) the sale or exchange of property located in other states.
If you reported gains on U.S. Form 4797 on property acquired before October 1, 1967, or located in other states, adjust the gain on the Michigan Adjustments of Gains and Losses From Sales of Business Property (MI-4797). Enter gains from the Michigan column of MI-1040D, line 12,
and MI-4797, line 18b(2). Instructions are with each form.
Line 4: Enter losses from a business or property located in another state which you own as a sole proprietor, a partner in a partnership, a shareholder in an S corporation, or as a member of a pass-through entity. If your business is taxed by both Michigan and another state, the loss must be apportioned. You must attach a Michigan Schedule of Apportionment (MI-1040H).
Line 5: Enter the net loss from the federal column of your MI-1040D, line 13, or MI-4797, line 18b(2) as a positive number.
Line 6: Enter the total of the following (attach a schedule if necessary):
• Add, to the extent not included in AGI, the amount of money withdrawn in the tax year from a Michigan
Education Savings Program (MESP) account, including the
MI 529 Advisor Plan (MAP), if the withdrawal was not a
qualified withdrawal as provided in the MESP Act. You may first exclude any amount that represents a return of contributions for which no deduction was claimed in any prior tax year.
• Add back gross expenses of producing oil and gas
(subject to Michigan severance tax) to the extent deducted in AGI.
• Amount of NOL deduction (NOL carryforward) used to reduce AGI (see page 8).
• Refund received from a Michigan Education Trust
(MET) contract. If you deducted the cost of a MET contract in previous years and received a refund from MET during 2012 because the MET contract was terminated, enter the smaller of: (1) the refund you received or (2) the amount of the original MET contract price including fees which you deducted in previous years.
Note: Part-year and nonresidents, subtract only income attributable to Michigan (Schedule NR, column B) that is not included on line 11.
Line 8: Enter income from U.S. government obligations (e.g., Series EE bonds, Treasury notes, etc.), including income from U.S. government obligations received through a partnership, S corporation, or other pass-through entity. This subtraction must be reduced by related expenses used to arrive at AGI.
are permitted to pass the tax-free exemption to their shareholders.
Michigan residents cannot subtract salaries and wages or other compensation earned outside Michigan. However, they may be entitled to a tax credit for income tax imposed by government units outside Michigan (see page 11). Residents may subtract:
• Net business income earned in other states and included in AGI, and
• Net rents and royalties from real property or tangible personal property located or used in another state.
Line 12: Qualifying retirement and pension benefits included in your AGI may be subtracted from income. Beginning in 2012, pension and retirement benefits will be taxed differently depending on the age of the recipient. See “Which Benefits are Taxable” on page 16. You must attach Form 4884. Line 13: Senior citizens (age 67 or older) may subtract interest, dividends, and capital gains included in AGI. This subtraction is limited to a maximum of $10,545 on a single return or $21,091 on a joint return. However, the maximum must be reduced by the retirement pension subtraction claimed on line 12. For help in calculating this subtraction, see “Tax Information for Seniors and Retirees” on Treasury’s Web site at www.michigan.gov/incometax.
Line 14: Enter only the taxable portion of Social Security and railroad retirement benefits (tier 1 and tier 2) included on your U.S. Form 1040, or your U.S. Form 1040A. Do not include your total Social Security benefits.
Line 15: Renaissance Zone deduction. To be eligible you must meet all the following requirements:
If income from U.S. government obligations exceeds
Be a permanent resident of a
$5,000, attach a copy of your U.S. Schedule B or
Schedule 1 listing the amounts received and the issuing
Be approved by your local assessor’s office.
Capital gains from the sale of U.S. government obligations must be adjusted on your MI-1040D.
Line 9: Enter compensation received for active duty in the U.S. Armed Forces included in AGI. Include military and Michigan National Guard retirement here.
Note: Compensation from the U.S. Public Health Service is not considered military pay.
Line 10: Enter the gains from the federal column of your MI-1040D, line 12, and MI-4797, line 18b(2). See instructions for Michigan Schedule 1, line 3 on page 13.
Line 11: Income Attributable to Another State. Nonresidents and part-year residents, complete Schedule NR. See instructions on page 50. Attach federal schedules.
• Not be delinquent for any State or local taxes abated by the Renaissance Zone Act.
• File an MI-1040 each year.
• Have gross income of $1 million or less.
If you were a full-year resident of a Renaissance Zone, you may subtract all income earned or received. Unearned income, such as capital gains, may have to be prorated. If you lived in the Zone at least 183 consecutive days during 2012, you may subtract the portion of income earned while a resident of the Zone. If you are a part-year resident of a Zone, you must complete and attach a Schedule NR to your MI-1040. (See “Special Note” on the back of Schedule NR, page 50.)
Certain Renaissance Zones began to phase out in 2007. The tax exemption is reduced in increments of 25 percent during the Zone’s final three years of existence. If you are a resident of a Zone that is phasing out (check with your local unit of government), you must reduce your deduction as follows:
• 25 percent for the tax year that is two years before the final year of designation as a Renaissance Zone.
• 50 percent for the tax year immediately preceding the
final year of the designation as a Renaissance Zone.
• 75 percent for the tax year that is the final year of the designation as a Renaissance Zone.
For additional information regarding qualifications for the Renaissance Zone deduction, call the Michigan Economic Development Corporation at (517) 373-9808. Line 16: You may subtract Michigan state and city income tax refunds and homestead property tax credit refunds that were included in AGI. Note to farmers: You may subtract (to the extent included in AGI) the amount that your state or city income tax refund and homestead property tax credit exceeds the business portion of your homestead property tax credit. Line 17: Michigan Education Savings Program. You may deduct, to the extent not deducted in calculating AGI, the total of all contributions less qualified withdrawals and rollovers (compute the contributions, withdrawals and rollovers separately for each account) made during 2012 by the taxpayer in the tax year to accounts established through the MESP, including the MAP. The deduction may not exceed $5,000 for a single return or $10,000 for a joint return per tax year. There are numerous education savings accounts available from other states and investment companies, but Michigan only allows a tax deduction for contributions to accounts established through MESP and MAP.
Line 18: Michigan Education Trust. You may deduct the following:
• If you purchased a MET contract during 2012, you may
deduct the total contract price (including the processing fee).
• If you made a charitable contribution to the MET
Charitable Tuition Program during 2012, you may deduct
the total contribution amount. You will receive a statement from MET to confirm the amount. All charitable donations will go toward providing scholarships to foster care students at Michigan public colleges.
• If you purchased a MET payroll deduction or monthly
purchase contract, you may deduct the amount paid on that contract during 2012 (not including fees for late payments
or insufficient funds). You will receive an annual statement from MET specifying this amount.
• If you have terminated a MET contract, you may deduct
the amount included in AGI as income to the purchaser.
Line 19: Net Operating Loss (NOL) Deduction. You may only deduct the Michigan NOL. Your Michigan NOL must be reduced by the Michigan apportionment of the domestic production activities deduction that was used to arrive at your 2012 AGI. You must attach Form MI-1045, pages 1 and 2 of your federal return and all supporting schedules. Line 20: Miscellaneous subtractions include:
• Any part of a qualified withdrawal from an MESP
account, including the MAP, included in AGI.
• Benefits from a discriminatory self-insured medical
expense reimbursement plan, to the extent these reimbursements are included in AGI.
• Losses from the disposal of property reported in the
18b(2).
• Amount used to determine the credit for elderly or
totally and permanently disabled from U.S. Form 1040A or U.S. Form 1040 Schedule R.
• Subtract the gross income from producing oil and gas
(subject to Michigan severance tax) to the extent included in AGI.
• Holocaust victim payments.
• Itemized deductions from U.S. Schedule A.
• Sick pay, disability benefits, and wage continuation
benefits paid to you by your employer or by an insurance
company under contract with your employer.
• Unemployment benefits included in AGI, except railroad unemployment benefits.
• Contributions to national or Michigan political parties or candidates.
• Proceeds and prizes won in State of Michigan regulated bingo, raffle, or charity games.
• Both the gross income and related expenses from oil
and gas production if the gross income was subject to
• Distributions from a retirement or pension plan
contributed to a qualified charitable organization.
• Distributions from a deferred compensation plan
received while a resident of Michigan.
• Lottery winnings. (Exception: installment payments
from prizes won on or before December 30, 1988, may be subtracted.) Include installment gross winnings as reported on your Form W-2G, box 1, and enter on your Schedule W,
Under Michigan law, qualifying pension and retirement benefits include most payments that are reported on a 1099-R for federal tax purposes. This includes defined benefit pensions, IRA distributions, and most payments from defined contribution plans. Payments received before
the recipient could retire under the provisions of the plan
or benefits from 401(k), 457, or 403(b) plans attributable
to employee contributions alone are not pension and retirement benefits under Michigan law, are taxable and
are subject to withholding.
Qualifying benefits include distributions from the following sources:
• Pension plans that define eligibility for retirement and set contribution and benefit amounts in advance.
• Qualified retirement plans for the self-employed.
• Retirement distributions from a 401(k) or 403(b) plan
attributable to employer contributions or attributable to employee contributions to the extent they result in
• IRA distributions received after age 59½ or described
by Section 72(t)(2)(A)(iv) of the IRC (series of equal periodic payments made for life).
• Benefits from any of the previous plans received due to
a disability, or as a surviving spouse if the decedent
qualified for the subtraction at the time of death and was born prior to January 1, 1953.
• Benefits paid to a senior citizen (age 65 or older) from a
retirement annuity policy that are paid for life (as opposed to a specified number of years).
• The State of Michigan.
• Michigan local governmental units (e.g., Michigan counties, cities, and school districts).
• Federal civil service.
For public and private pension or retirement benefits, you may not subtract:
• Amounts received from a deferred compensation plan
that lets the employee set the amount to be put aside and does not set retirement age or requirements for years of
service. These plans include, but are not limited to, plans under Sections 401(k), 457, and 403(b) of the IRC.
• Amounts received before the recipient could retire under
the plan provisions, including amounts paid on separation,
withdrawal, or discontinuance of the plan.
• Amounts received as early retirement incentives, unless the incentives were paid from a pension trust.
• Recipients born before 1946, the law remains the same
as it was prior to 2012. Those born before 1946 may subtract all qualifying pension and retirement benefits received from public sources, and may subtract qualifying private pension and retirement benefits up to $47,309 if
single or married filing separate, or $94,618 if married filing a joint return. If your public retirement benefits are greater than the maximum amounts you are not entitled to claim a subtraction for private pensions.
• Recipients born during the period 1946 through 1952
will be able to deduct up to $20,000 in pension and retirement benefits if single or married filing separate or
up to $40,000 if married filing a joint return. All pension or retirement benefits (public and private) are treated the same.
• Recipients born after 1952, all pension and retirement
benefits are taxable and you are not entitled to a pension subtraction.
NOTE: When completing Form 4884, surviving spouse means the deceased spouse died prior to the current tax year (e.g., when filing a 2012 return the spouse died in
FORM 4884 TABLE A: MAXIMUM ALLOWABLE PENSION DEDUCTION
Between 1/1/1946-12/31/1952
Line-by-Line Instructions for Michigan Pension Schedule (Form 4884)
Lines 1, 2, and 3: Enter your name(s) and Social Security number(s). If you are married, filing separate returns, enter both Social Security numbers, but do not enter your spouse’s name.
Lines 4 and 5: Enter your year(s) of birth. If you are married and filing separately, do not enter your spouse’s year of birth.
NOTE: If you are receiving pension benefits from a deceased spouse, who was born prior to January 1, 1953, before completing the rest of this form, go to page 2, part 3.
If filer or spouse (including deceased spouse) were born prior to January 1, 1946, and had public pension benefits, complete lines 6, 13 (a-c) and 14. Then use the combined retirement/ pension information from Part 2 and Part 3 to complete the worksheet below. If filer, or spouse if filing a joint return, were born prior to January 1, 1946, complete the worksheet using the combined retirement/pension income received from all sources. If public retirement/pension benefits are received from a deceased spouse and only the deceased spouse was born prior to January 1, 1946, complete the worksheet using only the benefits received for the deceased spouse.
Line 6: If you have more than six qualifying entries, continue those entries on the 2012 Michigan Pension Continuation Schedule (Form 4973).
Line 8: From Form 4884 Table A (see page 16), enter your maximum allowable pension deduction based on your filing status and year of birth of the oldest spouse.
Line 11: If you or your spouse were born before 1946 and received public pension benefits, complete the Public Pension Deduction Worksheet below and enter the amount from the Worksheet line 6.
Line 13: Enter deceased spouse name, Social Security number and year of birth. If deceased spouse was born after December 31, 1952, STOP; you may not deduct benefits from the deceased spouse.
Line 16: From Form 4884 Table A, enter your maximum allowable pension deduction based on your filing status and year of birth of the deceased spouse. If the decedent was born before 1946 and received public pension benefits, complete the Public Pension Deduction Worksheet below using only the decedent’s pension benefits and enter the amount from the Worksheet line 6.
FORM 4884 WORKSHEET 2 - PUBLIC PENSION DEDUCTION WORKSHEET
(ONLY for taxpayers born prior to January 1, 1946)
If filer or spouse (including deceased spouse) were born prior to January 1, 1946 and had public pension benefits, complete this worksheet. If filer, or spouse if filing a joint return, were born prior to January 1, 1946, complete the worksheet using the combined retirement/pension income received from all sources. If public retirement/pension benefits are received from a deceased spouse and only the deceased spouse was born prior to January 1, 1946, complete the worksheet using only the benefits received for the deceased spouse.
Line 1: Enter public pension or retirement benefits received. Do not include Social Security benefits.
Line 2: Enter $47,309 if single filer or married filing separately. Enter $94,618 if filing a joint return
Line 3: Subtract line 1 from line 2. If negative, enter “0.”
Line 4: Enter private pension or retirement benefits received
Line 5: Enter the lesser amount of line 3 or line
Line 6: Add lines 1 and 5. Carry the amount from line 6 of this worksheet to line 11 of form 4884 unless the public pension is only from a deceased spouse then carry the amount from line 6 of this worksheet to line 16 of form
NOTE: Certain amounts of interest/dividends/capital gains and pension distributions can be subtracted from taxable income. An online estimator is available to assist taxpayers in determining what amounts can be subtracted. Visit www.michigan.gov/taxes and select “Pension Estimator” from the Quick List, Services dropdown menu.
Scenario 1: Single with private retirement/pension benefits
Henry is filing as single. He was born in 1950 and is receiving a private pension of $15,000.
After completing lines 1 and 2, Henry enters 1950 on line 4.
He completes row 1 of line 6 by entering an X in Private for 6A, the payer FEIN in 6B, the name of payer in 6C, and $15,000 in 6D
He enters $15,000 on line 7
Step 4: He enters the maximum allowable pension deduction from Table A based on his year of birth. He enters $20,000 on line 8
Henry leaves line 9 blank as it does not apply to him
He subtracts line 9 from line 8. He enters $20,000 on line 10
He enters the smaller of line 7 or 10. He enters $15,000 on line 11
He enters the sum of lines 9 and 11. He enters $15,000 on line 12 and on Michigan Schedule 1, Line 12
Schedule 1, line 12
Scenario 2: Joint filer with private retirement/pension benefits
Jerry and Beverly are filing a joint return. Jerry was born in 1943 and is receiving a private 401(k) distribution of $40,000 as a result of matching employer with matched employee contributions. Beverly was born in 1957 and is receiving a private pension of $60,000.
After completing lines 1 through 3, Jerry and Beverly enter 1943 on line 4 and 1957 on line 5.
They complete row 1 of line 6 by entering an X in Private for 6A, the payer FEIN in 6B, the name of payer in 6C, and $40,000 in 6D
They complete row 2 of line 6 by entering an X in Private for 6A, the payer FEIN in 6B, the name of payer in 6C, and $60,000 in 6D
They enter $100,000 on line 7
They enter the maximum allowable pension deduction from Table A based on Jerry’s year of birth. They enter $94,618 on line 8
Jerry and Beverly leave line 9 blank as it does not apply to them
They subtract line 9 from line 8. They enter $94,618 on line 10
They enter the smaller of line 7 or 10. They enter $94,618 on line 11
They enter the sum of lines 9 and 11. They enter $94,618 on line 12 and on Michigan Schedule 1, Line 12
Line 6D, Row 1
Line 6D, Row 2
Scenario 3: Married filing separately with public retirement/pension benefits
Steve and Shirley are married filing separately. Steve was born in 1951 and is receiving a public pension of $50,000. Shirley was born in 1941 and is receiving a public pension of $45,000.
As Steve is married filing separately, he completes lines 1 and 2, leaves the spouse’s name line blank, and includes the spouse’s Social Security number on line 3.
Steve enters 1951 on line 4 and skips line 5.
Step 3: He completes row 1 of line 6 by entering an X in Public for 6A, the payer FEIN in 6B, the name of payer in 6C, and $50,000 in 6D
He enters $50,000 on line 7
Step 5: He enters the maximum allowable pension deduction from Table A based on his year of birth. He enters $20,000 on line 8
Steve leaves line 9 blank as it does not apply to him
He enters the smaller of line 7 or 10. He enters $20,000 on line 11
He enters the sum of lines 9 and 11. He enters $20,000 on line 12 and on Michigan Schedule 1, line 12
Scenario 4: Joint filers, both born between 1946 and 1952
Bob and Mary are filing a joint return. Bob, born in 1947, has an IRA (private) of $10,000 and a 401(k)-type public plan distribution of $30,000 as a result of matching employer with matched employee contributions. Mary, born in 1952, is receiving a public pension of $20,000.
After completing lines 1 through 3, Bob and Mary enter 1947 on line 4 and 1952 on line 5.
They complete row 1 of line 6 by entering an X in Private for 6A, the payer FEIN in 6B, the name of payer in 6C, and $10,000 in 6D
They complete row 2 of line 6 by entering an X in Public for 6A, the payer FEIN in 6B, the name of payer in 6C, and $30,000 in 6D
They complete row 3 of line 6 by entering an X in Public for 6A, the payer FEIN in 6B, the name of payer in 6C, and $20,000 in 6D
They enter $60,000 on line 7
They enter the maximum allowable pension deduction from Table A based on Bob’s year of birth. They enter $40,000 on line 8
Bob and Mary leave line 9 blank as it does not apply to them
They subtract line 9 from line 8. They enter $40,000 on line 10
Bob and Mary enter the smaller of line 7 or 10. They enter $40,000 on line 11
Step 8: They enter the sum of lines 9 and 11. They enter $40,000 on line 12 and on Michigan Schedule 1, line 12
Line 6D, Row 3
Scenario 5: Single filer receiving surviving spouse retirement/pension benefits
Alice, born in 1947, is a surviving spouse filing a single return. Her deceased husband Miguel was born in 1939 and died in
2010. Alice has public pension benefits of $37,500 and is also receiving surviving spouse benefits from Miguel’s public pension
of $69,000.
Step 1: After completing lines 1 through 3, Alice enters 1947 on line 4. Since Alice is receiving pension benefits from a deceased spouse she then completes Part 3 on page 2 of the form.
She enters Miguel’s full name on line 13a, his Social Security number on line 13b, and 1939 on line 13c.
She completes row 1 of line 14 by entering an X in Public for 14A, the payer FEIN in 14B, the name of payer in 14C, and $69,000 in 14D
She enters $69,000 on line 15
Step 5: Since Alice is receiving public pension benefits from Miguel and he was born prior to 1/1/1946, she completes the Public Pension Deduction Worksheet on page 17 for benefits listed on line 14 of form 4884.
She enters the surviving spouse benefits received from Miguel’s public pension on worksheet line 1
Worksheet, Line 1
Alice enters $47,309 on worksheet line 2 since she is a single filer
Worksheet, Line 2
She subtracts worksheet line 1 from worksheet line 2 and enters 0 on worksheet line 3, since line 1 is greater than line 2
Worksheet, Line 3
On worksheet line 4 she enters 0 since she received no surviving spouse private pension benefits from Miguel
Worksheet, Line 4
Step 10: She enters the lesser of worksheet line 3 or line 4. She enters 0 on worksheet line 5
Worksheet, Line 5
Alice adds worksheet lines 1 and 5. She enters $69,000 on worksheet line 6 and carries the amount to form 4884, line 16
Worksheet, Line 6
Alice enters the smaller of lines 15 and 16. She enters $69,000 on line 17 and carries the amount to line 9
She completes row 1 of line 6 by entering an X in Public for 6A, the payer FEIN in 6B, the name of payer in 6C, and $37,500 in 6D
She enters $37,500 on line 7
She enters the maximum allowable pension deduction from Table A
based on her year of birth.
She enters $20,000 on line 8
She subtracts line 9 from line 8 and enters 0 on line 10, since line 9 is greater than line 8
Alice enters the smaller of line 7 or 10. She enters 0 on line 11
She enters the sum of lines 9 and 11. She enters $69,000 on line 12 and on Michigan Schedule 1, line 12
Scenario 6: Joint filers with private and public retirement/pension benefits and receiving surviving spouse benefits
Howard and Georgia are filing a joint return. Howard, born in 1951, is receiving a private pension of $40,000 and a public pension of $10,000. Georgia, born in 1955, is receiving a public pension of $20,000. Howard’s deceased spouse, Edith, was born in 1944 and died in 2006. Howard is receiving $30,000 in surviving spouse pension benefits from Edith’s private pension.
After completing lines 1 through 3, Howard and Georgia enter 1951 on line 4 and 1955 on line 5. Since Howard is receiving pension benefits from a deceased spouse, they then complete Part 3 on page 2 of the form.
They enter Edith’s full name on line 13a, her Social Security number on line 13b, and 1944 on line 13c.
They complete row 1 of line 14 by entering an X in Private for 14A, the payer FEIN in 14B, the name of payer in 14C, and $30,000 in 14D
They enter $30,000 on line 15
Step 5: They enter the maximum allowable pension deduction from Table A based on Edith’s date of birth. They enter $94,618 on line
They enter the smaller of line 15 or 16. They enter $30,000 on line 17 and carry the amount to line 9
They complete row 2 of line 6 by entering an X in Public for 6A, the payer FEIN in 6B, the name of payer in 6C, and $10,000 in 6D
They enter $70,000 on line 7
They enter the maximum allowable pension deduction from Table A
based on Howard’s year of birth.
They enter $40,000 on line 8
They subtract line 9 from line 8. They enter $10,000 on line 10
They enter the smaller of line 7 or 10. They enter $10,000 on line 11
Step 12: They enter the sum of lines 9 and 11. They enter $40,000 on line 12 and on Michigan Schedule 1, line 12
Scenario 7: Filer and deceased spouse born prior to January 1, 1946, both receiving public retirement/pension benefits
David and Margaret are filing a joint return. David, born in 1947, is receiving a private pension of $10,000 and a public pension of $30,000. Margaret, born in 1940, is receiving a public pension of $15,000. Margaret’s deceased spouse, Frank, was born in 1939 and died in 2000. Margaret is receiving $8,000 in surviving spouse benefits from Frank’s public pension and $12,000 in surviving spouse benefits from his private pension.
After completing lines 1 through 3, David and Margaret enter 1947 on line 4 and 1940 on line 5. Since Margaret and Frank were both born prior to 1/1/1946 and had public pension benefits, they complete lines 6, 13 (a-c) and 14. They then use the combined retirement/pension information from Part 2 and Part 3 to complete the “Public Pension Deduction Worksheet” on page 17.
They complete row 3 of line 6 by entering an X in Public for 6A, the payer FEIN in 6B, the name of payer in 6C, and $15,000 in 6D
They enter Frank’s full name on line 13a, his Social Security number on line 13b, and 1939 on line 13c.
They complete row 1 of line 14 by entering an X in Public for 14A, the payer FEIN in 14B, the name of payer in 14C, and $8,000 in 14D
Line 14D, Row 1
They complete row 2 of line 14 by entering an X in Private for 14A, the payer FEIN in 14B, the name of payer in 14C, and $12,000 in 14D
Line 14D, Row 2
Step 5: David and Margaret enter combined public retirement/pension information from Part 2 and Part 3. They enter $53,000 on worksheet line
They enter $94,618 on worksheet line 2 since David and Margaret are joint filers
They subtract line 1 from line 2. line 3
They enter $41,618 on worksheet
They enter combined private retirement/pension information from Part 2 and Part 3. They enter $22,000 on worksheet line 4
They enter the lesser of worksheet line 3 or line 4. They enter $22,000 on worksheet line 5
They add worksheet lines 1 and 5. They enter $75,000 on worksheet line 6 and carry the amount to form 4884, line 11
They enter the sum of lines 9 and 11 Lines 7-10 and 15-17 will be blank. They enter $75,000 on line 12 and on Michigan Schedule 1, line 12
Scenario 8: Filer and spouse both born after December 31, 1952
Scott and Lisa are filing a joint return. Scott, born in 1954, is receiving public pension benefits of $30,000. Lisa, born in 1957, is receiving an IRA distribution (private pension) of $20,000.
As both Scott and Lisa were born after 12/31/1952, they are not entitled to a pension subtraction and do not complete Form 4884.
• Your homestead is located in Michigan.
• You were a Michigan resident at least six months of
• You were contracted to pay rent or own the home you live in.
You can have only one homestead at a time, and you must be the occupant as well as the owner or renter. Your homestead can be a rented apartment or a mobile home on a lot in a mobile home park. A vacation home or income property is not considered your homestead. Your homestead is in your state of domicile. Domicile is the place where you have your permanent home. It is the place to which you plan to return whenever you go away. College students and others whose permanent homes are not in Michigan are not Michigan residents. Domicile continues until you establish a new permanent home. Property tax credit claims may not be submitted on behalf of minor children. You may not claim a property tax credit if your total household resources are over $50,000. In addition, you may not claim a property tax credit if your taxable value exceeds $135,000 (excluding vacant farmland classified as agricultural). The computed credit is reduced by 10 percent for every $1,000 (or part of $1,000) that total household resources exceed $41,000. If filing a part-year return, you must annualize total household resources to determine if the income limitation applies. See Annualizing Total Household Resources on page 26.
Most filers should use the MI-1040CR in this booklet. If you are blind and own your homestead, are in the active military, are an eligible veteran, or an eligible veteran’s surviving spouse, complete forms MI-1040 and MI-1040CR-2 (available on Treasury’s Web site.) Use the form that gives you a larger credit. If you are blind and rent your homestead, you cannot use MI-1040CR-2. Claim your credit on MI-1040CR and check box 5b if you are age 65 or younger; otherwise, check box 5a.
If you are not required to file an MI-1040, you may file your credit claim as soon as you know your 2012 total household resources and property taxes levied in 2012. If you file a Michigan income tax return, your credit claim should be attached to your MI-1040 return and filed by April 15, 2013, to be considered timely. To avoid penalty and interest, if you owe tax, postmark no later than April 15, 2013. The filing deadline to receive a 2012 property tax credit is April 17, 2017.
File a new claim form and write “Amended” across the top of the form. You must do this within four years of the date set for filing your original income tax return.
Total household resources are the total income (taxable and nontaxable) of both spouses or of a single person maintaining a household. They are AGI, excluding net business and farm losses, net rent and royalty losses, and any carryover of a net operating loss, plus all income exempt or excluded from AGI. Include gains realized on the sale of your residence whether or not these gains are exempt from federal income tax.
Total household resources include the following items not listed on the form:
• Scholarship, stipend, grant, or GI bill benefits and
payments made directly to an educational institution.
• Compensation for damages to character or for personal
• An inheritance (except an inheritance from your spouse).
• Proceeds of a life insurance policy paid on the death of
the insured (except benefits from a policy on your spouse).
• Death benefits paid by or on behalf of an employer.
• Minister’s housing allowance.
• Forgiveness of debt, even if excluded from AGI (e.g., mortgage foreclosure).
• Reimbursement from dependent care and/or medical care spending accounts.
• Payments made on your behalf, except government
payments, made directly to third parties such as an educational institution or subsidized housing project.
• Net operating loss deductions taken on your federal return.
• Payments received by participants in the foster
grandparent or senior companion program.
• Energy assistance grants.
• Government payments to a third party (e.g., a doctor).
• Money received from a government unit to repair or improve your homestead.
• Surplus food or food assistance program benefits.
• State and city income tax refunds and homestead
property tax credits.
• Chore service payments (these payments are income to
the provider of the service).
• The first $300 from gambling, bingo, lottery, awards, or
• The first $300 in gifts of cash or merchandise received,
or expenses paid on your behalf (rent, taxes, utilities, food, medical care, etc.) by parents, relatives, or friends.
• Amounts deducted from Social Security or Railroad Retirement benefits for Medicare premiums.
• Life, health, and accident insurance premiums paid by your employer.
• Loan proceeds.
• Inheritance from a spouse.
• Life insurance benefits from a spouse.
• Payments from a long-term care policy made to a
nursing home or other care facility. For more information on total household resources, visit:
www.michigan.gov/taxtotalhouseholdresources.
If you received a farmland preservation tax credit in 2012, you must include it in total household resources. You may subtract the business portion of your homestead property tax credit if you included it in taxable farm income.
Ad valorem property taxes that were levied on your homestead in 2012, including collection fees up to 1 percent of the taxes, can be claimed no matter when you pay them. You may add to your 2012 taxes the amount of property taxes billed in 2012 from a corrected or supplemental tax bill. You must deduct from your 2012 property taxes any refund of property taxes received in 2012 that was a result of a corrected tax bill from a previous year. Do not include:
• Delinquent property taxes (e.g., 2011 property taxes paid in 2012).
• Penalty and interest on late payments of property tax.
• Delinquent water or sewer bills.
• Property taxes on cottages or second homes.
• Association dues on your property.
• Most special assessments for drains, sewers, and roads
do not meet specific tests and may not be included. You may include special assessments only if they are levied using a uniform millage rate, are based on taxable value, and are either levied in the entire taxing jurisdiction or they are used to provide police, fire, or advanced life
support services and are levied township-wide, except for all or a portion of a village.
Note: School operating taxes are generally only levied on the non-homestead portion of the property and may not
be included in taxes levied when computing the property tax credit on any portion of the home not used as your homestead. Home used for business. If you use part of your home for business, you may claim the property taxes on the living area of your homestead, but not the property taxes on the portion used for business. Attach a copy of U.S. Form 8829 to your Michigan return.
Owner-occupied duplexes. When both units are equal, you are limited to 50 percent of the tax on both units, after subtracting the school operating taxes from the total taxes billed. Owner-occupied income property. Apartment building and duplex owners who live in one of the units or single family homeowners who rent a room(s) to a tenant(s) must complete two calculations to figure the tax they can claim and base their credit on the lower amount. First, subtract 20 percent of the rent collected from the tax claimed for credit. Second, reduce the tax claimed for credit by the amount of tax claimed as rental expense on your U.S. Form 1040. Include a copy of the U.S. Schedule E with your Michigan return. Example: Your home has an upstairs apartment that is rented to a tenant for $395 a month. Total property taxes on your home are $2,150. Of this amount, $858 is claimed as rental expense. The calculations are as follows:
$395 x 12 = $4,740 annual rent $4,740 x .20 = $948 taxes attributable to the apartment $2,150 total taxes - $948 = $1,202 taxes attributable to owner’s homestead Step 2:
$2,150 total taxes - $858 taxes claimed as a business deduction = $1,292 taxes attributable to homestead Step 3:
The owner’s taxes that can be claimed for credit are $1,202, the smaller of the two computations. Farmers. Include farmland taxes in your property tax credit claim if any of the following conditions apply:
• If your gross receipts from farming are greater than
your total household resources, you may claim all of your
taxes on unoccupied farmland classified as agricultural. Do not include taxes on farmland that is not adjacent or contiguous to your home and that you rent or lease to another person.
• If gross receipts from farming are less than your total
household resources and you have lived in your home more
than ten years, you may claim the taxes on your home and the farmland adjacent and contiguous to your home.
household resources and you have lived in your home less than ten years, you may claim the taxes on your home and five acres of farmland adjacent and contiguous to your home.
Include any farmland preservation tax credit in your total household resources. Enter the amount of credit you received in 2012 on line 20 or include it in net farm income on line 16. Homestead property tax credits are not included in total household resources. If you included this amount in your taxable farm income, subtract it from total household resources.
• If you rent or lease housing that is subject to a service
charge or fees paid instead of property taxes, you may claim a credit based upon 10 percent of the gross rent paid. Use the amount the landlord gives you and enter rent paid on
line 56 and 10 percent of rent on line 57, and follow instructions.
• If your housing is exempt from property tax and no
service fee is paid, you are not eligible for credit. This includes university- or college-owned housing.
• If your housing costs are subsidized, base your claim on the amount you pay. Do not include the federal subsidy amount.
• If you are a mobile home park resident, claim the $3 per
month specific tax on line 10, and the balance of rent paid on line 11.
• If you are a cooperative housing corporation resident
member, claim your share of the property taxes on the building. If you live in a cooperative where residents pay rent on the land under the building, you may also claim 20
percent of that land rent. (Do not take 20 percent of your total monthly payment).
• When you pay room and board in one fee, you must
determine your portion of the tax that can be claimed for credit based on square footage.
Example: You pay $750 a month for room and board. You occupy 600 square feet of a 62,000 square foot apartment building. The landlord pays $54,000 in taxes per year. If you pay room and board in separate billings, you must base your property tax credit on rent.
Step 1: 600/62,000 = 0.0097 Step 2: $54,000 x 0.0097 = $524 taxes you can claim for credit Home used for business. If you use part of your apartment or rented home for business, you may claim the rent on the living area of your homestead, but not the rent on the portion used for business.
If You Moved in 2012
Residents who temporarily lived outside Michigan may qualify for a credit if Michigan remained their state of domicile. Personal belongings and furnishings must have remained in the Michigan homestead and the homestead must not have been rented or sublet during the temporary absence. (See the definitions of resident on page 7 and domicile on page 23.)
If you bought or sold your home or moved during 2012, you must prorate your taxes. Complete MI-1040CR, Part 3, page 3, to determine the taxes that can be claimed for credit. Use only the taxes levied in 2012 on each Michigan homestead, then prorate taxes based on days of occupancy. Do not include taxes on out-of-state property. Do not include property taxes for property with a taxable value greater than $135,000. Excluded from this restriction is unoccupied farmland classified as agricultural by your assessor.
If you lived in Michigan at least six months during the year, you may be entitled to a partial credit. If you are a part-year resident, you must include all income received as a Michigan resident in total household resources (line 33). Complete MI-1040CR, Part 3, page 3, to determine the taxes eligible to be claimed for credit on your Michigan homestead.
Deceased Claimant’s Credit
The estate of a taxpayer who died in 2012 (or 2013 before filing a claim) may be entitled to a credit for 2012. The surviving spouse, other authorized claimant, or personal representative can claim this credit. Use the decedent’s Social Security number and the personal representative’s address. If the taxpayer died after December 31, 2011, enter the date of death in the “Deceased Taxpayer” box on page 3. The surviving spouse may file a joint claim with the deceased. Enter both names and Social Security numbers on the form, and write “DECD” after the decedent’s name. Sign the return and write “filing as surviving spouse” in the deceased’s signature line. Enter the date of death in the “Deceased Taxpayer” box on the bottom of page 3. Include the decedent’s income in total household resources.
If filing as a personal representative or claimant for the refund of a single deceased taxpayer, you must attach U.S. Form 1310 or Michigan Claim for Refund Due a Deceased Taxpayer (MI-1310). Enter the decedent’s name in the Filer’s Name line and the representative’s or claimant’s name, title and address in the Home Address line. See the “Deceased Taxpayer Chart of Examples” on page 59. A claimant must prorate to the date of death as noted in the following paragraph.
The personal representative or claimant claiming a credit for a single deceased person or on a jointly filed credit if both filers became deceased during the 2012 tax year, must prorate taxes to the date of death. Complete lines 48 through 52 to prorate the property taxes. Annualize total household resources. (See the instructions on page 26.) Attach a copy of the tax bills or lease agreements. If filing as a personal representative or claimant of deceased taxpayers for a jointly filed return, you must attach a U.S. Form 1310 or MI-1310. Enter the names of the deceased persons in the Filer’s and Spouse’s Name lines and the representative’s or claimant’s name, title, and address in the Home Address line. See “Deceased Taxpayer Chart of Examples” on page 59.
If you are filing a part-year credit (for a deceased taxpayer or a part-year resident), you must annualize the total household resources to determine if the credit reduction applies. (Exception, the surviving spouse filing a joint claim does not have to annualize the deceased spouse’s income.)
• If you have checked a box on line 5 and your annualized
total household resources are less than $6,000 use your annualized total household resources to determine your percentage of taxes not refundable from MI-1040CR Table 2, page 29.
• A senior, age 65 or older, filing a part-year credit must
calculate annualized total household resources before using MI-1040CR Table A, page 29.
• If the annualized income is more than $41,000, use
annualized total household resources to determine the
percentage allowable in MI-1040CR Table B, page 29.
Step 1: Divide 366 by the number of days the taxpayer was a Michigan resident in 2012.
Step 2: Multiply the answer from step 1 by the taxpayer’s total household resources (MI-1040CR, line 33). The result is the annualized total household resources.
Married During 2012
If you married during 2012, combine each spouse’s share of taxes or rent for the period of time you or your spouse lived in separate homesteads prior to getting married. Then add this to the prorated taxes or rent for your marital home after your marriage. You are only allowed to claim rent and taxes on homesteads located in Michigan.
Spouses who file separate Michigan income tax returns and share a household are entitled to one property tax credit. Complete your property tax credit claim jointly and include income from both spouses in total household resources. Divide the credit as you wish. If each spouse claims a portion of the credit, attach a copy of the claim showing each spouse’s share of the credit to each income tax return. Enter only your portion of the credit on MI-1040CR, line 45.
Separated and Filing a Joint Return With Your Spouse
Filing Separate Federal and State Returns and Maintaining Separate Homesteads
You may each claim a credit. Each credit is based on the individual taxes or rent and individual total household resources for each person. This only applies to homes located in Michigan.
Separated or Divorced in 2012
Figure your credit based on the taxes you paid together
before your separation plus the taxes you paid individually after your separation. Attach a schedule showing your computation. For more information or to help you calculate
a prorated share of taxes, see Michigan Homestead
Property Tax Credits for Separated or Divorced Taxpayers (Form 2105). Example: Karl and Cheryl separated on October 2, 2012. The annual taxes on the home they owned were $1,860. Cheryl continued to live in the home and Karl moved to an apartment on October 2 and paid $350 per month rent for the rest of the year. Cheryl earned $20,000 and Karl earned $25,000. They lived together for 275 days.
Step 1: Calculate the prorated total household resources for each spouse for the 275 days they lived together. Divide each spouse’s total income by 366 days, then multiply that figure by 275. Cheryl ($20,000/366) x 275 = $15,027
($25,000/366) x 275 = $18,784
$15,027 + $18,784 = $33,811
Step 3: Divide each individual’s prorated share of total household resources by the total from Step 2 to determine the percentage attributable to each. Cheryl $15,027/$33,811 = 44%
Step 4: Calculate the prorated taxes eligible for credit for the time they lived together. Divide the $1,860 by 366 days, then multiply by 275 days. ($1,860/366) x 275 = $1,398 Step 5: Calculate each individual’s share of the prorated taxes. Multiply the $1,398 by the percentages determined in Step 3.
$18,784/$33,811 = 56%
$1,398 x 44% = $615
$1,398 x 56% = $783
If you are a resident of a nursing home, adult foster care
home, or home for the aged, that facility is considered your homestead. If the facility pays local property taxes (many do not), you may claim your portion of those taxes for credit. You may not claim rent. Ask the manager what your share is or, to determine it yourself, divide the amount of property tax levied on the facility in 2012 by the number of residents for which the facility is licensed. This is your
share. If both you and your spouse live in the facility, add your shares together. If you lived in the facility only part
of the year, multiply this amount by the portion of the year you lived at the facility. Exception: Credit is not allowed if your care facility charges are paid directly to the facility by a government agency.
If you maintain a homestead and your spouse lives in an adult care home, you may file a joint credit claim. Combine the tax for your homestead and your spouse’s share of the facility’s property tax to compute your claim. If you are single and maintain a homestead (that is not rented) while living in an adult care home, you may
claim either your homestead or your share of the facility’s property tax, but not both. Use the one that gives you the larger credit.
Line-by-Line Instructions for MI-1040CR
Lines 1, 2, and 3: Enter your name(s), address, and Social Security number(s). If you are married, filing separate claims, enter both Social Security numbers, but do not enter your spouse’s name. Line 5: Check the box that applies to you or your spouse as of December 31, 2012, if any. If both boxes apply, only check box 5b. Line 5a: Age 65 or older. This includes the unremarried surviving spouse of a person who was 65 or older at the time of death. You are considered 65 the day before your 65th birthday. Line 5b: Deaf, hemiplegic, paraplegic, quadriplegic, or totally and permanently disabled (as defined under Social Security Guidelines 42 USC 416). If you are age 66 or older you may not claim an exemption as totally and permanently disabled. A claimant who is blind qualifies as totally and permanently disabled. Blind means your better eye permanently has 20/200 vision or less with corrective lenses, or your peripheral field of vision is 20 degrees or less. Line 6: Filing Status. Check the box to identify your filing status. If you file a joint federal return, you must file a joint property tax credit. Married couples who file married filing separate must include the total household resources of both spouses unless you filed separate federal returns and maintained separate homesteads. If you filed your federal return as head of household or qualifying widow(er), you must file the property tax credit as single or, if married, married filing separately. Line 7: Residency. Check the box that describes your Michigan residency for 2012. If you and your spouse had
a different residency status during the year, check a box
for each of you. If you checked box “c” enter the dates of Michigan residency in 2012.
Line 8: Homestead Status. Check this box if the taxable value of your homestead includes unoccupied farmland classified as agricultural by your assessor.
Line 9: If the taxable value of your homestead is greater than $135,000, STOP; you are not eligible for the homestead property tax credit. If your taxable value is less than $135,000, enter the 2012 taxable value from your 2012 property tax statement or assessment notice.
If you do not know your taxable value, contact your local
assessor. Farmers should include the taxable value of
all land that qualifies for this credit (see instructions for farmers on page 24). Farmers should note that the $135,000 limit on taxable value does not apply to the taxable value of their homestead attributable to unoccupied farmland classified as agricultural. Line 10: Read “Property Taxes That Can Be Claimed for Credit” on page 24 before you complete this line. Line 11: Read “Rent That Can Be Claimed for Credit” on page 25 before you complete this line.
Include all taxable and nontaxable income you and your spouse received in 2012. If your family lived in Michigan and one spouse earned wages outside Michigan, include the income earned both in and out-of-state in your total household resources. (See “Total Household Resources” page 23.) Line 14: Enter all compensation received as an employee. Include strike pay, supplemental unemployment benefits (SUB pay), sick pay, or long-term disability benefits, including income protection insurance, and any other amounts reported to you on Form W-2. Line 15: Do not include business dividend and interest income reported as a distributable share on Form K-1. See line 16 instructions. Line 16: Add the amounts from:
• U.S. Schedule C (Profit or Loss from Business).
• Part II (Ordinary Gains and Losses) of the U.S. Form 4797.
• Part II (Income or Loss from Partnerships and S Corporations) and Part III (Income or Loss from Estates and Trusts) of the U.S. Schedule E.
• U.S. Schedule F (Profit or Loss from Farming).
• Include income items reported as a distributive share.
If the total is negative enter “0.” Include amounts from sources outside Michigan. Attach the above federal schedules to your claim. Line 17: Add the amounts from:
• Part I (Income or Loss from Rental Real Estate and Royalties) of the U.S. Schedule E.
• Part IV (Income or Loss from Real Estate Mortgage
Investment Conduits (REMIC)) of the U.S. Schedule E (rents, royalties).
If the total is negative enter “0.” Include amounts from sources outside Michigan. Attach the above federal schedules to your claim.
Line 18: Enter all annuity, retirement pension, and individual retirement account (IRA) benefits. This should be the taxable amount shown on your U.S. Form 1099-R. If no taxable amount is shown on your U.S. Form 1099-R, use the amount required to be included in AGI. Enter “0” if all of your distribution is from your contributions made with income previously included in AGI. Include reimbursement payments such as an increase in a pension to pay for Medicare charges. Also include the total amount of any lump sum distribution including amounts reported on your U.S. Form 4972. Do not include recoveries of after- tax contributions or amounts rolled over into another plan (amounts rolled over into a Roth IRA must be included to the extent included in AGI). You must include any part of a distribution from a Roth IRA that exceeds your total contributions to the Roth IRA regardless of whether this amount is included in AGI. Assume that all contributions to the Roth IRA are withdrawn first. Note: Losses from Roth IRAs cannot be deducted. Line 19: Enter net capital gains and losses. This is the total of short-term and long-term gains, less short-term and long-term losses from your U.S. Schedule D (losses cannot exceed $3,000 if single or married filing jointly, or $1,500 if married filing separately). Exclude any items reported on line 16. Include gains realized on the sale of your residence whether or not these gains are exempt from federal income tax. Line 20: Enter alimony received and other taxable income. Describe other taxable income. This includes:
awards, prizes, lottery, bingo, and other gambling winnings over $300; farmland preservation tax credits if not included in net farm income on line 16; and forgiveness of debt to the extent included in federal AGI (e.g., mortgage foreclosure). Line 21: Enter your Social Security, Supplemental Security Income (SSI), and/or Railroad Retirement benefits. Include death benefits and amounts received for minor children or other dependent adults who live with you. Report the amount actually received. Medicare premiums reported on your Social Security or Railroad Retirement statement should be deducted. Line 22: Enter child support and all payments received as a foster parent. Note: If you received a 2012 Custodial Party End of Year Statement (FEN-851) showing child support payments paid to the Friend of the Court, enter the child support portion here and attach a copy of the statement. See line 27 instructions. Line 23: Enter all unemployment compensation received during 2012.
Line 24: Enter the value over $300 in gifts of cash or merchandise received, or expenses paid on your behalf (rent, taxes, utilities, food, medical care, etc.) by parents, relatives, or friends. Do not include government payments made directly to third parties such as an educational institution or subsidized housing project. Line 25: Enter other nontaxable income. This includes:
• Compensation for damages to character or for personal injury or sickness.
• Adoption subsidies.
• Forgiveness of debt to the extent not included in federal AGI (e.g., mortgage foreclosure).
Line 26: Enter workers’ compensation, service-connected disability compensation and pension benefits from the Veterans Administration. Veterans receiving retirement benefits should enter the benefits on line 18.
Line 27: Enter the total payments made to your household by DHS and all other public assistance payments. Your 2012 Client Annual Statement (DHS- 1241) mailed by DHS in January 2013 will show your total DHS payments. Your statement(s) may include the following: Family Independence Program (FIP) assistance, State Disability Assistance (SDA), Refugee Assistance, Repatriate Assistance, and vendor payments for shelter, heat, and utilities. Note: If you received a 2012 FEN-851 (attach a copy), subtract the amount of child support payments entered on line 22 from the total DHS payments and enter the difference here. Line 30: Enter total adjustments from your U.S. Form 1040 or U.S. Form 1040A. Describe adjustments to income. These adjustments reduce total household resources and include some of the following:
• Payments to IRAs, SEP, SIMPLE, or qualified plans.
• Student loan interest deduction.
• Moving expenses into or within Michigan can be
included in “Other Adjustments” to reduce total household
resources. Moving expenses when moving out of Michigan
cannot be included in “Other Adjustments” to reduce total household resources.
• Deduction for self-employment tax.
• Penalty on early withdrawal of savings.
• Alimony paid.
• Jury duty pay you gave to your employer.
• Archer Medical Savings Account (MSA) deduction.
• Any other adjustments to gross income included on your 2012 U.S. Form 1040.
Line 31: Enter health insurance premiums, Health Maintenance Organization (HMO) premiums, or other insurance premiums you paid for yourself and your family. Include the following premiums:
• Prescription drug plan.
• Automobile insurance (medical care portion only).
Do not include any insurance premiums deducted on lines 21 or 30, amounts paid for income protection insurance (long-term disability), long-term care insurance, or amounts paid by an employer with pre-tax payroll contributions.
Line 34: Multiply line 33 by 3.5 percent (0.035) or the percentage from MI-1040CR Table 2 below. This is the amount that will not be refunded. The personal representative claiming a credit for a deceased taxpayer with total household resources of $6,000 or less must annualize the decedent’s income and use the annualized figure to determine the nonrefundable percentage from Table 2. Then use the actual total household resources to compute the credit. See “Annualizing Total Household Resources” on page 26.
MI-1040CR TABLE 2 - PERCENT OF TAXES
ALL GENERAL CLAIMANTS
OTHER CLAIMANTS *
*Other claimants are senior citizens or people who
are paraplegic, hemiplegic, quadriplegic, deaf, or
totally and permanently disabled or unremarried
spouse of an individual 65 or older.
Part 1: Allowable Computation Based on Claimant Status Complete only section A, B, or C, whichever applies to you. Senior claimants who checked box 5a complete Section A. Disabled claimants who checked box 5b complete Section B. All other claimants complete Section C. Line 37: Enter the percentage from MI-1040CR Table A that applies to your total household resources from line 33. A senior, age 65 or older, filing a part-year credit must calculate annualized total household resources to determine the reduction percentage using MI-1040CR Table A.
MI-1040CR TABLE A — SENIOR CREDIT REDUCTION
100% (1.00)
96% (0.96)
92% (0.92)
88% (0.88)
84% (0.84)
80% (0.80)
76% (0.76)
72% (0.72)
68% (0.68)
64% (0.64)
$30,001 - above
60% (0.60)
Line 42: If you are a senior claimant enter the amount from line 38. If you are a disabled claimant enter the amount from line 39. All others enter the amount from line 41. If you received FIP assistance or other DHS benefits in 2012, prorate your credit to reflect the ratio of income from other sources to total household resources. To prorate your credit use the information from your form to complete MI-1040CR Worksheet 3 on page 30.
Line 43: The computed credit is reduced by 10 percent for
every $1,000 (or part of $1,000) that your
resources exceed $41,000. Enter the percentage from MI-1040CR Table B that applies to your total household resources from line 33.
NOTE: If you are filing a part-year credit and the annualized income is more than $41,000, use annualized