2010 Michigan MI-1040 - Individual Income Tax

2010 Michigan MI-1040
  Individual Income Tax
                 Forms and Instructions


        w w w. m ic h ig a n.g ov/ t a x e s


 aa E-filing your return is easy, fast, and secure!                              w w w. m i fa s t f i l e .or g
 aa Two-thirds (over 3.3 million) of all Michigan
    taxpayers choose e-file.
 aa E-file returns are usually processed within 14
    business days (see page 4). Please allow 14 days
    before checking the status of your e-filed return.
 aa Tax preparers who complete 200 or more
    Michigan Individual Income Tax returns are
    required to e-file all eligible returns supported by their software (see page 4).
 aa Free e-file is available. Do you qualify?
 aa Visit the Michigan Department of Treasury Web site at www.MIfastfile.org to find
    an authorized e-file provider near you, a list of resources offering this service, and
    information on free e-file services.




                               Fi l i ng D ue D at e :
                                 A pr il 1 8 , 2 0 1 1


         This booklet is intended as a guide to help complete your return. It does not take the place of the law.
                                                                                                                    1
Help With Your Taxes
Self Service Options                                         Telephone Options
                                                             (517) 636-4486
The Michigan Department of Treasury (Treasury) offers        Automated Information Service
a variety of services designed to assist you, and most are
available 24 hours a day, seven days a week.                 With Treasury’s automated phone system, you can:
                                                             • Request the status of your refund.
 IMPORTANT: To obtain information about your account
 using the Internet and Telephone Options listed below,      • Request information on estimated payments.
 you will need the following information from your return:   • Order current tax year forms.
 • Social Security number of the primary filer (the filer    While most questions can be answered by the Automated
 listed first on the return)                                 Information Service, customer service representatives are
 • Tax year of the return                                    available from 8 a.m. to 4:45 p.m., Monday through Friday.
 • Adjusted gross income (AGI) or household income           Assistance is available using TTY through the Michigan
 • Filing status (single, married filing jointly, married    Relay Center by calling 1-800-649-3777 or 711. Printed
 filing separately).                                         material in an alternate format may be obtained by calling
Internet Options                                             (517) 636-4486.
www.michigan.gov/incometax
                                                             Forms
Find the following information on this Web site:
• Current year forms and instructions                        Find tax forms using the Internet and Telephone Options
• Answers to many tax preparation questions                  listed on this page. Commonly used forms are also
• Most commonly used tax forms                               available at Treasury offices (see back cover), most public
• Free assistance in preparing your return                   libraries, Northern Michigan post offices, Michigan
• Other tax time resources.                                  Secretary of State branch offices, and Department of
www.michigan.gov/iit                                         Human Services (DHS) county offices.
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.
• Change your address.
• Ask a specific question about your account.




                               Anytime of the night or day, go to
                            www.michigan.gov/taxes
                             and look for these icons to help find
                                     answers to your questions!




2
Important Information
Use Tax                                                         2010 U.S. Form 1040. If you claimed an itemized deduction
                                                                for property taxes on your 2009 U.S. Form 1040 and then
Every state that has a sales tax has a companion tax for        received a refund in 2010 from the State or your local unit
purchases made outside that state, by catalog or over the       of government for a portion of those taxes, you must include
Internet. In Michigan, that companion tax is called the “use    that refund as income on your 2010 U.S. Form 1040. If you
tax,” but might be described more accurately as a remote        have questions about the taxability (for federal tax purposes)
sales tax because it is a 6 percent tax owed on purchases       of the refunds, call the IRS at 1-800-829-1040.
made outside of Michigan. See page 9 for more information
on use tax.                                                     What You Should Know
                                                                About Your Michigan 1099-G
Tax Rate, Exemption Allowances,
and Pension and Interest Deductions                             If you itemized deductions on your 2009 federal income tax
                                                                return and received a Michigan tax refund in 2010, you will
The income tax rate for 2010 is 4.35 percent.                   be mailed a 2010 Michigan 1099-G in early 2011 that shows
For tax year 2010, the personal exemption allowance             the amount of your 2009 refund that was issued in 2010. The
remains at $3,600 and the special exemptions allowance          refund amount will include any amounts credited forward to
remains at $2,300. See page 10 for more information.            2010 estimated tax, prior year refunds issued in 2010, refund
For tax year 2010, pension benefits included in AGI from        amounts intercepted for back tax assessments or other debts
a private pension system or an Individual Retirement            (such as child support or court-ordered garnishments),
Account (IRA) are deductible to a maximum of $45,120 for        and any portion of a refund assigned to pay use tax or any
a single filer or $90,240 for joint filers.                     amount you contributed as a voluntary contribution. The
                                                                refund amount will not include homestead property tax
Senior citizens age 65 or older may be able to deduct           credits, adoption credits, or other refundable tax credits
part of their interest, dividends, and capital gains that are   claimed on the MI-1040. The 1099-G IS NOT A BILL.
included in AGI. For 2010, the deduction is limited to a        Visit www.michigan.gov/taxes for more information about
maximum of $10,058 for single filers and $20,115 for joint      your Michigan 1099-G.
filers. See Schedule 1 instructions beginning on page 12
for further details regarding pension benefits and senior       A Note About Debts
citizen interest deductions.                                    By law, any money you owe to the State and other agencies
Exemption for Qualified Disabled Veterans                       must be deducted from your refund or credit before it is
                                                                issued. Debts include money you owe for past-due taxes,
Taxpayers who either have a service-connected disability        student loans, child support due the Friend of the Court,
or have a dependent with a service-connected disability         an IRS levy, money due a State agency, a court-ordered
may be eligible to claim a $300 exemption for tax year          garnishment, or other court orders. Taxpayers who are
2010. See the instructions for line 9e on page 10.              married, filing jointly, may receive an Income Allocation to
Renewable Energy Surcharge Credit                               Non-Obligated Spouse (Form 743) after the return is filed.
                                                                Completing and filing this form may limit the portion of the
The credit has been reduced to 20 percent in 2010 and can       refund that can be applied to a debt. If Treasury applies all
only be claimed if you were billed the surcharge by your        or part of your refund to any of these debts, you will receive
electric utility company. See page 16, line 10 instructions     a letter of explanation.
for further details.
                                                                Adjusted Gross Income (AGI)
Filing Extension Granted for Military                           Throughout this booklet, we refer to adjusted gross income
Personnel Serving in a Combat Zone                              as AGI. When AGI is asked for, copy your AGI directly
United States military personnel serving in a combat zone       from your U.S. Form 1040 line 37, U.S. Form 1040A line 21,
on April 18, 2011, will be given 180 days after leaving the     or U.S. 1040EZ line 4.
combat zone to file their federal and State tax returns and
will be exempt from penalties and interest. When e-filing,      Instruction Booklets No Longer Mailed
service men and women serving in combat zones should            To help reduce costs and in recognition of the continued
enter the words “Combat Zone” in the preparer notes.            growth in electronic filing, the IRS has announced it will
When filing a paper return, print “Combat Zone” in ink on       discontinue the mailing of federal income tax forms and
the top of page 1 of the MI-1040. Visit Treasury’s Web site     instructions to taxpayers. As a result of approved budgetary
at www.michigan.gov/taxes for more information.                 savings measures and an increase in electronic filing,
                                                                the state of Michigan also will no longer mail Individual
Appeals of Adjusted Refunds or Credits                          Income Tax forms and instruction booklets to individuals.
Taxpayers have 60 days from the issuance of refund denials,     All current year forms and instructions are available at
refund adjustments, or Treasury decisions (other than final     www.michigan.gov/incometax. In addition, commonly
assessment), that may be appealed under Section 22 of the       used forms are available at Treasury offices (see back cover),
Revenue Act, to request informal conferences.                   most public libraries, Northern Michigan post offices,
                                                                Michigan Secretary of State branch offices, and Department
Property Tax Credits/Refunds                                    of Human Services (DHS) county offices. There are many
A reminder from the Internal Revenue Service (IRS).             free tax preparation services available. To find out if you
Michigan homestead property tax credit and homestead            qualify or to locate a free preparation service site near you,
exemption refunds received in 2010 may be taxable on your       visit www.michiganeic.org/freetaxprep.

                                                                                                                            3
Who Must File a Return                                              Penalty and Interest
File a return if you owe tax, are due a refund, or your AGI         Added for Filing and Paying Late
exceeds your exemption allowance. You should also file              If you file and pay late, Treasury will add a penalty of
a Michigan return if you file a federal return, even if you         5 percent of the tax due. After the second month, penalty
do not owe Michigan tax. This will eliminate unnecessary            will increase by an additional 5 percent per month, or
correspondence from Treasury.                                       fraction thereof, up to a maximum of 25 percent of the tax
• If your parents (or someone else) can claim you as a              due. If you pay late, you must add penalty and interest to
dependent on their return and your AGI is $1,500 or less if         the amount due. The interest rate through June 30, 2011,
single or married filing separately or $3,000 or less if filing     is 4.25 percent. For interest rates after June 30, 2011, visit
a joint return, you do not need to file a return unless you are     Treasury’s Web site at www.michigan.gov/taxes or call
claiming a refund of withholding.                                   (517) 636-4486.
Important: If your income subject to tax (MI-1040, line 14)         Choose e-file Instead of Paper
is less than your personal exemption allowance (line 15) and        Returns. Get Your Refund Fast!
Michigan income tax was withheld from your earnings, you
                                                                    E-filing eliminates many of the errors that lengthen
must file a return to claim a refund of the tax withheld.           processing times. E-file returns are usually processed
Renaissance Zones                                                   within 14 days. Tax preparers who complete more than 200
                                                                    income tax returns are required to e-file all eligible returns.
Certain Renaissance Zones, along with the tax benefits, will        Visit Treasury’s Web site at www.MIfastfile.org to find
continue to phase out. See instructions for Schedule 1, line        an authorized e-file provider near you, a list of resources
15, on page 13.                                                     offering this service, and information on free e-file services.
Who Must File a Joint Return
File a joint Michigan return if you filed a joint federal return.
If you filed separate federal returns, you may file separate or
joint Michigan returns. You may file a joint return only with
your spouse.
When to File Your Return
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 18, 2011,
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 “2010 income tax”
on the front of the check. To avoid penalty and interest, if
you owe tax, postmark no later than April 18, 2011.
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. See
page 6. 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.




4
How to Complete and File Paper Returns
Completing Michigan Forms                                      • Underpayment of Estimated Income Tax (MI-2210)
                                                               • Withholding Tax (Schedule W)
Treasury captures the information from paper income tax        • Adjustments of Capital Gains and Losses (MI-1040D)
returns using an Intelligent Character Recognition (ICR)
                                                               • Adjustments of Gains and Losses From Sales of Business
process. If completing a paper return, avoid unnecessary
                                                               Property (MI-4797)
delays by following the guidelines below so your return is
processed quickly and accurately.                              • Voluntary Contributions Schedule (4642)
                                                               • Energy Efficient Qualified Home Improvement Credit
• Use black or blue ink. Do not use pencil, red ink, or        (4764)
felt tip pens. Do not highlight information.
• Print using capital letters (UPPER CASE). Capital            If you are also filing a Home Heating Credit Claim
                                                               (MI-1040CR-7) do not staple it to your return; fold it and
letters are easier to recognize.
                                                               leave it loose in the envelope.
• Print        numbers       like    this:    0123456789
Do not put a slash through the zero ( ) or seven ( ).          Important Reminder: If you do not include all the
• Fill check boxes with an [X]. Do not use a check mark        required attachments with your return, your refund may be
[ a].                                                          reduced, denied, or delayed. Send original forms. Do not
• Leave lines/boxes blank if they do not apply or if the       send photocopies.
amount is zero unless otherwise directed.                      Do not staple multiple prior year returns together.
• Do not write extra numbers, symbols, or notes on the
return, such as cents, dashes, decimal points, commas, or      Where to Mail Your Return
dollar signs. Enclose any explanations on a separate sheet     Mail refund, credit, or zero due returns to:
unless you are instructed to write explanations on the              Michigan Department of Treasury
return.                                                             Lansing, MI 48956
• Stay within the lines when entering information in
boxes.                                                         If you owe tax, mail your return to:
• If a form is multiple pages, all pages must be filed.             Michigan Department of Treasury
• Report all amounts in whole dollars. Round down                   Lansing, MI 48929
amounts of 49 cents or less. Round up amounts of 50 cents
or more. If cents are entered on the form, they will be        Make check payable to “State of Michigan” and print
treated as whole dollar amounts.                               your SSN and “2010 income tax” on the front of your
                                                               check. To ensure accurate processing of your return, send
When You Have Finished                                         one check for each return type. Do not staple your check
If the tax preparer is someone other than the taxpayer, he     to your return.
or she must enter the business name and address of the         Do not mail your 2010 return in the same envelope with a
firm he or she represents and Preparer Tax Identification      return for years prior to 2010; mail your 2010 return in a
Number (PTIN), Federal Employer Identification Number          separate envelope.
(FEIN), or Social Security number (SSN). Check the box
to indicate if Treasury may discuss your claim with your       Important Reminders
tax preparer.                                                  • Missing      pages.     The    MI-1040,    MI-1040CR,
Assemble your returns and attachments and staple in            MI-1040CR-2, MI-1040CR-7, and MI-1040X are two-page
the upper-left corner. (Do not staple your check to your       forms. Both pages must be completed and submitted for
return.) If an Individual Income Tax Barcode Datasheet         Treasury to process the form timely.
(Form 4220) is part of your filing, it must be the first       • Using correct tax year forms. Appropriate tax year
item in the sequence followed by MI-1040. A sequence           forms must be filed (e.g., do not use a 2009 form to file
number is printed in the upper-right corner of the following   your 2010 return).
Michigan forms to help you assemble them in the correct        • Schedules received alone. The following forms must
order behind your MI-1040:                                     be submitted with a completed MI-1040:
• Additions and Subtractions and Nonrefundable Credits             ○○ Withholding Tax (Schedule W)
(Schedule 1/Schedule 2)                                            ○○ Nonresident and Part-Year Resident (Schedule NR)
• Nonresident and Part-Year Resident (Schedule NR)                 ○○ College Tuition and Fees Credit (Schedule CT)
• Farmland Preservation Tax Credit (MI-1040CR-5)                   ○○ Additions and Subtractions (Schedule 1)
• Schedule of Taxes and Allocation to Each Agreement               ○○ Nonrefundable Credits (Schedule 2)
(Schedule CR-5)                                                    ○○ Historic Preservation Credit (3581)
• Property Tax Credit (MI-1040CR or MI-1040CR-2)               • Missing, incomplete, or applied for SSN. If you don’t
• College Tuition and Fees Credit (Schedule CT)                have an SSN or an Individual Taxpayer Identification
• Federal Schedules (see Table 4, page 47)                     Number (ITIN), apply for one through the IRS. Do not file
• Schedule of Apportionment (MI-1040H)                         your Michigan return until you have received your SSN or
• Qualified Adoption Expenses ( MI-8839)                       ITIN.



                                                                                                                       5
Special Situations
Extensions                                a fiscal year filer, the due dates are     failing to file estimate payments or
                                          the same as your federal estimated         10 percent (with a minimum of $10)
To request more time to file your         payment due dates.                         for failing to pay enough with your
Michigan tax return, send a payment                                                  estimates or paying estimates late.
of your estimated tax to Treasury         If you filed estimates for 2010,
                                          Treasury will send you personalized        Interest is 1 percent above the prime
with a copy of your approved federal                                                 rate and is computed monthly. The
extension (U.S. Form 4868) on or          forms for 2011, unless you used a
                                          tax preparer (see page 4). Otherwise,      rate is adjusted on July 1 and January 1.
before the original due date of your
return. Treasury will extend the due      request Michigan Estimated Income          Residency
date to your new federal due date. If     Tax Voucher (MI-1040ES).
                                                                                     Resident. You are a Michigan resident
you do not have a federal extension,      Exceptions. If you expect to owe           if Michigan is your permanent home.
file an Application for Extension of      more than $500, you may not have           Your permanent home is the place
Time to File Michigan Tax Returns         to make estimated payments if you          you intend to return to whenever you
(Form 4) with your payment. Treasury      expect your 2011 withholding to be at      go away. A temporary absence from
will not notify you of approval. Do       least:                                     Michigan, such as spending the winter
not file an extension if you will be                                                 in a southern state, does not make you
                                          • 90 percent of your total 2011 tax, or
claiming a refund.                                                                   a part-year resident.
                                          • 100 percent of your total 2010 tax.
An extension of time to file is NOT                                                  Income earned by a Michigan
                                          Total 2010 tax is the amount on
an extension of time to pay. If you do                                               resident in a nonreciprocal state
                                          your 2010 MI-1040, line 19, less the
not pay enough with your extension                                                   (see “Reciprocal States” on page 7)
                                          amount on lines 24, 25, 26, 27, 28b,
request, you must pay interest on the                                                or Canadian province is taxed by
                                          29, and 30.
unpaid amount. Compute interest                                                      Michigan, and may also be taxed by
from the original due date of the         Note: 2011 estimates for taxpayers         the other jurisdiction. If you pay tax
return. Interest is 1 percent above the   with 2010 AGI of $150,000 or more          to both, you can claim a credit on your
prime rate and is adjusted on July 1      for joint or single filers ($75,000 or     Michigan return. See instructions for
and January 1.                            more for married filing separate) must     Schedule 2, line 5, and the example
                                          equal 90 percent of the current year’s     on page 16.
You may be charged a penalty of 10
                                          liability or 110 percent of the previous
percent or more if the balance due is                                                Part-year resident. You are a part-
                                          year’s liability.
not paid with your extension request.                                                year resident if, during the year, you
                                          Farmers, fishermen, or seafarers           move your permanent home into
When you file your MI-1040, include
                                          may have to pay estimates, but have        or out of Michigan. You must pay
on line 32 the amount of tax you paid
                                          different filing options. If at least      Michigan income tax on income you
with your extension request. Attach a
                                          two-thirds of your gross income is         earned, received, or accrued while
copy of your federal or State extension
                                          from farming, fishing, or seafaring,       living in Michigan.
to your return.
                                          you may:
2011 Estimated Payments                                                              Use Michigan Nonresident and
                                          • Delay paying your first 2011             Part‑year       Resident      Schedule
Usually, you must make estimated          quarterly       installment      (with     (Schedule NR) and the following
income tax payments if you expect         MI‑1040ES) until as late as                guidelines to help you figure your
to owe more than $500 when you            January 17, 2012, and pay the entire       tax:
file your 2011 MI-1040. This is after     amount of your 2011 estimated tax          • Allocate your income from the date
crediting the property tax, farmland,     due, or                                    you moved into or out of Michigan.
any other refundable or nonrefundable     • File your 2011 MI-1040 return and        • Bonus pay, severance pay, deferred
credits, and amounts you paid through     pay the entire amount of tax due on or     income, and any other amount
withholding.                              before March 1, 2012.                      accrued while a Michigan resident are
Common income sources which make          You are considered a farmer                subject to Michigan tax no matter
estimated payments necessary are          or fisherman if you file U.S.              where you lived when you received it.
self-employment income, salary and        Schedule F or Schedule C. Wages            • Deferred compensation reported to
wages if you do not have enough tax       earned as a farm employee or from          you on U.S. Form 1099-R and
withheld, tips, lump sum payments,        a corporate farm do not qualify you        dividend and interest income are
unemployment benefits, dividend and       for this exception. You are considered     allocated to the state of residence
interest income, income from the sale     a seafarer if your wages are exempt        when received.
of property (capital gains), and rental   from income tax withholding under          • Part-year residents who lived in
income.                                   Title 46, Shipping, USC, Sec. 11108.       Michigan at least six months of the
You may ask your employer to              Failure to make payments or                tax year may qualify for a homestead
increase your withholding to cover        underpayment of estimates. If you fail     property tax credit (see page 19).
the taxes on other types of income.       to make required estimated payments,       Note: Out-of-state students who live
Estimated payments are due April 18,      pay late, or underpay in any quarter,      in Michigan while they are attending
2011; June 15, 2011; September 15,        Treasury may charge penalty and            school are not considered Michigan
2011; and January 17, 2012. If you are    interest. Penalty is 25 percent of the     residents or part-year residents and
                                          tax due (with a minimum of $25) for        should file as nonresidents.
6
Nonresident. Use Schedule NR to            due a refund. A full-year exemption      If a change on your federal return
figure your Michigan taxable income.       is allowed for a deceased taxpayer on    affects Michigan taxable income, you
You must pay Michigan income tax           the 2010 MI-1040.                        must file MI-1040X within 120 days
on the following types of income:                                                   of the change. Include payment of any
                                           Use the deceased’s Social Security
                                                                                    tax and interest due.
• Salary, wages, and other employee        number and your address. If the
compensation for work performed in         taxpayer died after December 31,         To amend only a homestead property
Michigan, unless you live in a state       2009, check the appropriate box(es) in   tax or home heating tax credit, file a
covered by a reciprocal agreement          the “Deceased Taxpayers” section on      revised claim form clearly marked
(see “Reciprocal States” below)            the bottom of page 2 on MI‑1040.         “Amended.” Do not file MI-1040X.
• Net rents and royalties from real        The surviving spouse may file a joint    Net Operating Losses (NOL)
and tangible personal property in          return for 2010. Write your name
Michigan                                                                            If you have a federal NOL deduction,
                                           and the deceased’s name and both         you must add back the federal
• Capital gains from the sale or           Social Security numbers on MI-1040.      deduction      on    your     Michigan
exchange of real property located in
                                           Write “DECD” after the deceased’s        Schedule 1, line 6, to the extent
Michigan, or of tangible personal
                                           last name. You must report the           included in federal AGI. A subtraction
property located in Michigan
                                           deceased’s income. Sign the return.      for a Michigan NOL deduction may
• Patent or copyright royalties if the
                                           In the deceased’s signature block,       be claimed on Schedule 1, line 20, and
patent or copyright is used in
                                           write “Filing as surviving spouse.” If   is calculated on page 1 of Application
Michigan or if you have a commercial
                                           the taxpayer died after December 31,     for Michigan Net Operating Loss
domicile in Michigan
                                           2009, check the appropriate box(es) on   Refund (MI-1045). Compute your
• Income (including dividend and
                                           page 2 of the MI-1040. See “Deceased     Michigan NOL and Michigan NOL
interest income) from an S
                                           Taxpayer Chart of Examples” on page      deduction by completing the MI‑1045.
corporation, partnership or an
                                           47, example A.                           File MI-1045 to claim a refund for a
unincorporated business, or other
business activity in Michigan              If filing as a personal representative   carryback deduction. Returns for
• Lottery winnings                         or claimant and you are claiming a       tax years affected by carryforward
• Prizes won from casinos or               refund for a single deceased taxpayer,   deductions must have MI-1045
licensed horse tracks located in           you must attach a U.S. Form 1310 or      attached to substantiate the deduction.
Michigan.       Nonresidents     from      Michigan Claim for Refund Due a          Repayments of Income
reciprocal states must also declare        Deceased Taxpayer (MI-1310). Enter       Reported in a Prior Year
these prizes as taxable.                   the deceased’s name in the Filer’s       If you had to repay an amount of
                                           Name fields and the representative’s     money in 2010 which you claimed
Reciprocal States
                                           or claimant’s name in the Spouse’s       as income in a previous year (e.g.,
Illinois,     Indiana,    Kentucky,        Name fields. See “Deceased Taxpayer      unemployment benefits), you may be
Minnesota, Ohio, and Wisconsin             Chart of Examples” on page 47,           entitled to a credit on your 2010 return
have reciprocal agreements with            example B or C.                          for the tax paid in an earlier year.
Michigan. Michigan residents pay
                                           If filing as a personal representative   If you subtracted the repayment
only Michigan income tax on their
                                           or claimant of a deceased taxpayer(s)    in arriving at AGI, no additional
salaries and wages earned in any of
these states. A Michigan resident          for a jointly filed return, you must     credit is allowed on the Michigan
can file a withholding form with           attach a U.S. Form 1310 or Michigan      return because your income for
an employer in a reciprocal state to       Claim for a Refund Due a Deceased        the year has been reduced by the
claim exemption from that state’s          Taxpayer (MI-1310). Enter the names      repayment amount. If the amount of
income tax withholding. The out-of-        of the deceased persons in the Filer’s   the repayment was deducted on U.S.
state income might make Michigan           and Spouse’s Name fields and the         Schedule A or a credit was claimed on
income tax estimate payments               representative’s or claimant’s name,     U.S. Form 1040, line 71, a credit will
necessary. Residents of reciprocal         title, and address in the Home Address   be allowed on the Michigan return.
states working in Michigan do not          field. See “Deceased Taxpayer Chart      To compute your Michigan credit,
have to pay Michigan tax on salaries       of Examples” on page 47, example D       multiply the amount you repaid in
or wages earned in Michigan but do         or E.                                    2010 by the tax rate which was in
have to pay Michigan tax on business       For information about filing a credit    effect the year you paid the tax. Then
income earned from business                claim, see “Deceased Claimant’s          add the amount of the credit to the
activity in Michigan. A resident of a      Credit” on page 19.                      Michigan tax withheld on MI-1040,
reciprocal state who claims a refund                                                line 31. Write “Claim of Right/
of Michigan withholding tax must file      Amended Returns                          Repayment” next to line 31.
a Schedule NR along with MI-1040.          If you need to make a correction         Attach a schedule showing the
                                           to your return, file an Amended          computation of the credit, proof of
Deceased Taxpayers                         Michigan Individual Income Tax           the repayment, and pages 1 and 2 of
A personal representative for the          Return (MI-1040X). If you are due a      your U.S. Form 1040 and Schedule A
estate of a taxpayer who died in 2010      refund on your amended return, you       if applicable.
(or 2011 before filing a 2010 return)      must file it within four years of the
must file if the taxpayer owes tax or is   due date of the original return.
                                                                                                                          7
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.

CREDITS                                                                                           SUBTRACTIONS
The following refundable credits may be claimed on your MI-1040.                                  The following subtractions are claimed on your Michigan
The line reference follows the credit listed below.                                               Schedule 1; total subtractions are carried forward to the MI-1040,
MI-1040 - Refundable Credits                                                   Page No.           line 13. The Schedule 1 line reference follows the subtraction
                                                                                                  listed below.
Homestead Property Tax Credit (24).......................................... 17
                                                                                                                                                                                        Page No.
Farmland Preservation Tax Credit (25) . .................................... 18
                                                                                                  Income from U.S. government obligations
Qualified Adoption expenses (26)............................................... 11
                                                                                                  (Series EE Bonds, Treasury notes, etc.) (8)............................... 12
Stillbirth Credit (27).................................................................... 11
                                                                                                  Compensation received for active duty in
Earned Income Tax Credit (28)................................................... 11               U.S. Armed Forces (9)............................................................. 12
Energy Efficient Qualified Home Improvement Credit (29)...... 11                                  Gains from federal column of Michigan
Historic Preservation Tax Credit (30)......................................... 11                 MI-1040D (15) and MI-4797 (10)............................................ 12
The following nonrefundable credits may be claimed on your                                        Income attributable to another state (11).................................. 12
Schedule 2. The line reference follows the credit listed below.                                   Qualifying retirement and pension benefits (12)...................... 13
Schedule 2 - Nonrefundable Credits                                                                Dividends, interest, and capital gains for senior citizens (13)... 13
City Income Tax Credit (1)......................................................... 15            Taxable Social Security and Tier 1 railroad benefits (14)....... 13
Public Contribution Credit (2).................................................... 15             Renaissance zone deduction (15).............................................. 13
Community Foundations Credit (3)............................................ 15                   Michigan state and city income tax refunds and
Homeless Shelter/Food Bank Credit (4)..................................... 15                     homestead property tax credit refunds (16).............................. 14
Taxes paid to government units outside Michigan (5)................ 16                            Contributions made to accounts established through MESP
                                                                                                  (17).............................................................................................. 14
Historic Preservation Tax Credit (6)........................................... 16
                                                                                                  Contract price for a MET contract (18)................................... 14
College Tuition and Fees Credit (7) . ........................................ 16
                                                                                                  Charitable contributions to MET programs (18)...................... 14
Vehicle Donation Credit (8) ...................................................... 16
                                                                                                  Venture Capital Deduction (19)................................................. 14
Individual or Family Development Account Credit (9) . .......... 16
                                                                                                  Contributions to national or Michigan political parties
Renewable Energy Surcharge Credit (10) ................................ 16                        or candidates (20)....................................................................... 14
The following credit is claimed on the MI-1040CR-7 Home                                           Benefits from a discriminatory self-insured medical
Heating Credit Claim form.                                                                        expense reimbursement plan (20).............................................. 14
Home Heating Credit........ See MI-1040CR-7 Instruction Booklet                                   Proceeds and prizes won in a Michigan
                                                                                                  regulated bingo, raffle, or charity games (20).......................... 14
ADDITIONS                                                                                         Deduction for claiming a work opportunity credit, clinical
                                                                                                  testing (orphan drug) credit, or research credit (20)................ 14
The following additions are claimed on your Michigan Schedule 1;
                                                                                                  Losses from disposal of property (20).................................... 14
total additions are carried forward to the MI-1040, line 11. The
Schedule 1 line reference follows the addition listed below.                                      Amount used to determine the credit for elderly
                                                                                                  or totally and permanently disabled (20) . ............................. 14
                                                                                   Page No.       Michigan NOL deduction (20)................................................. 14
Gross interest, dividends, and income from obligations or                                         Gross income included in AGI from Michigan gas and
securities of states and their political subdivisions other                                       oil royalty interest or working interest (20)............................. 14
than Michigan (1)...................................................................... 12
                                                                                                  Distributions from individual retirement accounts used
Deduction taken on your federal return for self-employment                                        to pay qualified higher education expenses (20)...................... 14
tax or other taxes on or measured by income (2).................. 12
                                                                                                  Holocaust victim payments (20)................................................ 14
Capital gains from the Michigan column of the MI-1040D
or MI-4797 (3).......................................................................... 12       Distribution from a pension or retirement plan that is
                                                                                                  contributed to a qualifying charitable organization (20).......... 14
Certain losses from a business or property located
in another state (4).................................................................... 12
Net loss from the federal column of your Michigan
MI-1040D, line 15, or MI-4797, line 18b(1) (5).................... 12
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)......... 12
Net operating loss deduction used to reduce AGI (6)............ 12
Refund received from a Michigan Education Trust (MET)
contract (6)................................................................................ 12

8
Use Tax
Every state that has a sales tax has            Line 1 should contain a number                          TABLE 1 - USE TAX
a companion tax for purchases                   unless you made no purchases under
made outside that state by catalog,             $1,000 subject to the use tax. If we          AGI*                                         Tax
telephone, or Internet. In Michigan,            later determine that you owe use tax,         $0 - $10,000..................................$4
that companion tax is called the “use           you may be subject to penalty and             $10,001 - $20,000.......................$12
tax,” but might be described more               interest.                                     $20,001 - $30,000.......................$20
accurately as a remote sales tax                Line 2: In all cases, if a single             $30,001 - $40,000.......................$28
because it is a 6 percent tax owed on           purchase is $1,000 or more, you               $40,001 - $50,000.......................$36
purchases made outside of Michigan.             must pay 6 percent use tax on those           $50,001 - $75,000.......................$50
Use tax is due on catalog, telephone,           purchases.
                                                                                              $75,001 - $100,000.....................$70
or Internet purchases made from                 Example: Kurt ordered a computer              Above $100,000.....Multiply AGI by
out‑of‑state sellers as well as                 from a catalog retailer in New York                                    0.08% (0.0008)
purchases while traveling in foreign            for $1,437.50. Kurt also purchased
                                                items over the Internet for less than         * AGI from MI-1040, line 10.
countries when the items are to be
brought into Michigan. Use tax must             $1,000 during the year, but lost his
be paid on the total price (including           receipts. He is sure he did not pay
                                                Michigan sales tax. Kurt’s AGI                Use Tax on the Difference
shipping and handling charges).
                                                is $46,500. Kurt would complete               If you paid at least 6 percent to
How to Pay Use Tax                              Worksheet 1 as follows:                       another state on your purchase, you
Use Worksheet 1 below to calculate              Line 1: Kurt selects $36 from                 do not owe use tax to Michigan. If
your tax and enter the amount of tax            the table based on his AGI........... $36     you paid less than 6 percent, you owe
due on MI-1040, line 22.                                                                      the difference.
                                                Line 2: Kurt enters
Worksheet Calculation                           $1,437.50 x 6 percent............... $86.25   Note: The full 6 percent use tax is
                                                                                              owed on purchases made in a foreign
Line 1: For purchases of $0-$1,000,             Line 3: Total use tax due ..... $122.25
                                                                                              country.
multiply your total purchases times 6           Kurt would enter $122 (no cents) on
percent (0.06) and enter the amount on          his 2010 MI-1040, line 22.                         For more information, visit
Line 1, or                                                                                          www.michigan.gov/taxes.
                                                Estimating your taxes does not
If you have incomplete or inaccurate            preclude Treasury from auditing
receipts to calculate your purchases,           your account. If additional tax is
you may use Table 1 - Use Tax                   due, you may receive an assessment
to estimate your taxes. (See the                for the amount of the tax owed, plus
following example.)                             applicable penalty and interest.


                       WORKSHEET 1 - USE TAX
  Line 1: Itemized purchases of $0 to $1,000 x
  6 percent (0.06) OR Use Tax table 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 2010 MI-1040, line 22. If the
  amount on Line 3 is 0, enter “0” on your 2010 MI-1040, line 22.




                                                                                                                                                 9
Line-by-Line Instructions for MI-1040
Lines not listed are explained on the form.   Multiply the number of exemptions by             active military, naval, marine, coast
Line 1: Only married filers may               your exemption allowance of $3,600               guard, or air service who received an
file joint returns. Include name and          and enter that amount in the box.                honorable or general discharge and
address.                                      Exemptions. Complete the lines                   has a disability incurred or aggravated
                                              that apply to you, your spouse, or               in the line of duty as described in
Lines 2 and 3: Write your SSN(s).                                                              38 USC 101(16). This additional
                                              dependents as of December 31, 2010.
Line 5: State Campaign Fund.                  If your dependent files an annual                exemption may not be claimed on
These funds are disbursed only to             return, you and your dependent may               more than one tax return.
candidates for governor, regardless           not both claim the special exemption.            f) Unemployment       compensation.
of political party, who agree to              b) Age 65 or older. You are considered           Check this box if 50 percent or more
limit campaign spending and meet              age 65 the day before your 65th                  of your AGI (MI-1040, line 10) is
the campaign fund requirements.               birthday. If you claim this exemption,           from unemployment compensation. If
Choosing “Yes” will not raise your                                                             you checked the box, enter $2,300 in
                                              you may not claim an exemption as
tax or reduce your refund.                                                                     the space provided.
                                              totally and permanently disabled.
Line 6: Only farmers, fishermen,              c) Deaf, Blind, or Disabled. You                 g) If someone else can claim you as
and seafarers should check this box.          qualify for this exemption if                    a dependent, check the box, complete
(For estimate filing information, see         you are deaf, blind, hemiplegic,                 Worksheet 2 below, and enter the
page 6.)                                      paraplegic, quadriplegic, or totally             amount from the worksheet in the
Line 7: Filing Status. Check the box          and permanently disabled.          Deaf          space provided on line 9g.
to identify your filing status. If you        means the primary way you receive
                                                                                               Line 10: Adjusted Gross Income.
file a joint federal return, you must         messages is through a sense other
                                                                                               Enter your AGI from your federal
file a joint Michigan return and you          than hearing (e.g., lip reading or sign
                                                                                               return. This is the amount from your
cannot be claimed as a dependent on           language). Blind means your better
another person’s tax return. Married                                                           U.S. Form 1040, line 37, U.S. Form
                                              eye permanently has 20/200 vision
couples who file separate federal                                                              1040A, line 21, or U.S. Form 1040EZ,
                                              or less with corrective lenses, or your
returns may file a separate or joint          peripheral field of vision is 20 degrees         line 4. You must attach copies of
Michigan return. If you are claiming          or less. Totally and permanently                 federal schedules that apply to you
a homestead property tax credit or            disabled means disabled as defined               (see Table 4 on page 47). For Michigan
other tax credits, it may be easier to        under Social Security Guidelines 42              adjustments to AGI, see Schedule 1,
file a joint Michigan return because          USC 416. If you are age 65 or older,             page 31. Instructions for completing
total (joint) household income is the         you may not claim an exemption as                Schedule 1 begin on page 12.
basis for computing these credits. If         totally and permanently disabled. You            Line 17: Tax. Multiply the amount
your status is married filing separately      may claim only one exemption per                 on line 16 by 4.35 percent (0.0435).
(box c), write your spouse’s full name        person in this category.
in the space provided and be sure to                                                           Line 18: Nonrefundable          Credits.
                                              d) Child 18 and Under. Enter $600                Enter the total amount of nonrefundable
write his or her SSN on line 3. If you
                                              for each child 18 and under as of                credits from Schedule 2, line 11.
filed your federal return as head of
                                              December 31, 2010, whom you claim
household or qualifying widow(er),                                                             Line 19: Income Tax. Carry this
you must file the Michigan return as          as a dependent.
                                                                                               amount to line 20.
single.                                       e) Qualified Disabled Veterans. A
                                              taxpayer may claim an exemption                  Line 21: Voluntary Contributions.
Line 8: Residency. Check the box              of $300 in addition to the taxpayer’s            Contribution amounts can be made
that describes your Michigan residency                                                         on Voluntary Contribution Schedule.
                                              other exemptions if (a) the taxpayer or
for 2010. If you and your spouse had a                                                         (Form 4642). Attach Form 4642
                                              spouse is a qualified disabled veteran,
different residency status during the
                                              or (b) a dependent of the taxpayer is            to ensure your contributions are
year, check a box for each of you. Both
                                              a qualified disabled veteran. To be              applied to the fund(s) of your choice.
part-year residents and nonresidents
                                              eligible for the additional exemption            Contributions will increase your tax
must file Nonresident and Part-Year
Resident Schedule (Schedule NR).              an individual must be a veteran of the           due or reduce your refund.
(For definition of residency, see page
6.)                                                                 WORKSHEET 2 - FILER ELIGIBLE
                                                                   TO BE CLAIMED AS A DEPENDENT
Line 9: Exemptions. Use this line
                                               Is your AGI (from your federal return) over $1,500 if single or married filing separately?
to compute your Michigan exemption
amount plus your Michigan special              YES. If single or married filing separately, enter “0” on line 9a and $1,500 on line 9g.
exemptions.                                    Do not continue the rest of this worksheet.
                                               OR
a) Enter the number of exemptions              NO. Then was Michigan income tax withheld from your wages?
you claimed on your U.S. Form 1040             Continue with the following two questions.
or 1040A, line 6d. These exemptions                  • If YES, enter “0” on lines 9h and 19, and complete line 10 and lines 21 through 37.
are for you, your spouse (if filing                    OR
jointly), and your dependents.                      • If NO, you do not need to file this return.
10
Line 22: Use Tax. Enter use tax due                                 WORKSHEET 3 - STILLBIRTH CREDIT
from Worksheet 1, line 3, on page 9.
                                             A. Enter number of Certificates of Stillbirth for 2010 (see line 27                       .
Line 24: Property tax credit infor-             instructions below for qualifications).................................................    ___________
mation begins on page 17.                    B. Multiply line A by $170. Enter here and carry to MI-1040, line 27..                        ___________
Line 25: Farmland preservation credit
applies to farmers only. See page 18.
                                           Line 32: Enter the total estimated                            Direct Deposit
Line 26: Qualified           Adoption      tax paid with your 2010 MI‑1040ES,
Expenses. Enter the amount from            the amount paid with a Form 4, and                            First check with your financial
your Michigan Qualified Adoption           the amount of your 2009 overpayment                           institution to (1) make sure it will
Expenses (MI-8839), line 10. Attach        applied to this year’s tax (2009                              accept Direct Deposit, (2) obtain
a completed U.S. Form 8839 and a           MI‑1040, line 39).                                            the correct Routing Transit Number
completed MI-8839.                                                                                       (RTN) and account number, and (3) if
                                           Line 34: You Owe. If line 33 is less                          applicable, verify that your financial
Line 27: Stillbirth Credit. If you         than line 23, enter the difference. This
are the mother of a stillborn delivered                                                                  institution will allow a joint refund
                                           is the tax you owe with your return.                          to be deposited into an individual
during 2010 and have been issued
a Certificate of Stillbirth from the       You will owe penalty and interest for                         account.
Michigan Department of Community           late payment of tax if you pay after
                                                                                                         Direct Deposit requests associated
Health, attach a copy of the certificate   the due date. Penalty accrues monthly
                                                                                                         with a foreign bank account are
to MI-1040 and complete Worksheet 3        at 5 percent of the tax due, and
                                                                                                         classified as International ACH
above.                                     increases by an additional 5 percent
                                                                                                         Transactions (IAT). If your income
                                           per month, or fraction thereof, after
If you do not have a certificate,                                                                        tax refund Direct Deposit is forwarded
                                           the second month, up to a maximum
contact the Michigan Department of                                                                       or transferred to a bank account in a
                                           of 25 percent of the tax due (e.g.,
Community Health at (517) 335-8666                                                                       foreign country your Direct Deposit
                                           penalty on a $500 tax due will be $125
for an application or information on                                                                     will be returned to Treasury. If this
                                           if the tax is unpaid for six months).
obtaining the certificate. You should                                                                    occurs, your refund will be converted
                                           See “Penalty and Interest Added for
not file for the credit until you have                                                                   to a check (warrant) and mailed to the
                                           Filing and Paying Late” on page 4.                            address on your tax return. Contact
the certificate. You can amend your
                                           Add penalty and interest to your tax                          your financial institution for questions
2010 return at a later date should you
                                           due and enter the total on line 34.                           regarding the status of your account.
get the certificate after you file the
                                           Generally, if you owe more than $500,
original return.                                                                                         a. RTN. Enter the nine-digit RTN.
                                           you are required to make estimated
Line 28: Michigan Earned Income            payments. See special note below and                          The RTN is usually found between the
Tax Credit (EITC). Taxpayers               information about estimated payments                          symbols |: and |: on the bottom of your
who are eligible to claim an EITC          on page 6. If the balance due is less                         check. The first two digits must be “01”
on their federal return may claim a        than $1, no payment is required, but                          through “12” or “21” through “32”.
Michigan EITC equal to 20 percent          you must still file your return. See                          b. Type of Account. Check the box
of the taxpayer’s federal credit. To       “Pay” address on page 2 of your                               for checking or savings.
claim the Michigan credit, enter your      MI-1040.
federal EITC amount on line 28a and                                                                      c. Account Number. Enter your bank
20 percent of line 28a on line 28b.        Special note for people required to                           account number up to 17 characters
                                           file estimates. You may owe penalty                           (both numbers and letters).      The
Line 29: Energy Efficient Qualified        and interest for underpayment, late                           account number is usually found
Home Improvement Credit. Enter the         payment, or for failing to make                               immediately to the right of the RTN
amount from your completed Energy          estimated tax payments. Use the                               on the bottom of your check. Include
Efficient Qualified Home Improvement       Underpayment of Estimated Income                              hyphens but omit spaces and special
Credit (Form 4764), line 7. Attach         Tax (MI-2210) to compute penalty and                          symbols. Enter the number from left
completed Form 4764 to MI-1040.            interest. If you do not file an MI-2210,                      to right. Do not include the check
Line 30: Michigan              Historic    Treasury will compute your penalty                            number.
Preservation Tax Credit.          Enter    and interest and send you a bill. If
the amount from your 2010 Historic         you annualize your income, you must                           When You Are Finished
Preservation Tax Credit (Form 3581),       complete and attach MI-2210. Enter                            Sign Your Return. Each spouse
line 16a or 16b, whichever applies.        the penalty and interest amounts on                           must sign a joint return. If the tax
Attach a completed Form 3581 and           the lines provided.                                           preparer is someone other than the
U.S. Form 3581, if applicable.             Line 37: Refund. This includes                                taxpayer, he or she must include the
Line 31: Enter the total Michigan          any tax you overpaid and any credits                          name and address of the firm he or
tax withheld (from your Schedule           due you. The State does not refund                            she represents and tax preparer tax
W). If applicable, include any credit      amounts less than $1. Mail your                               identification or federal employer
for repayments under the “Claim of         return to the “Refund, credit, or                             identification number. Check the box
Right.” See “Repayments of Income          zero returns” address on page 2 of                            to indicate if Treasury may discuss
Reported in a Prior Year” on page 7.       MI‑1040.                                                      your return with your preparer.
                                                                                                                                                         11
Signing a child’s return. If a return       If you owe tax. Make check payable        The filing deadline to receive
is prepared for a child who is too          to “State of Michigan” and print          a refund for tax year 2010 is
young to sign it, a parent or guardian      your Social Security number and           April 20, 2015.
should sign the child’s name, then add      “2010 income tax” on the front of
“by (your name) parent (or guardian)        your check. Enclose your payment
for minor child.”                           but do not staple it to the return.
Attachments. Attach all your credit         Checks stapled to the back of the
claims and required Michigan and            return may not be seen and may result
federal schedules (see Table 4 on page      in improper processing.
47).



                                Line-by-Line Instructions for Schedule 1
Part-year and nonresidents, complete        Line 4: Enter losses from a business      Subtractions From Income
Schedule NR (see page 39) before            or property located in another state
proceeding.                                 which you own as a sole proprietor, a     Note: Part-year and nonresidents,
                                            partner in a partnership, a shareholder   subtract only income attributable to
Additions to Income                                                                   Michigan (Schedule NR, column B)
                                            in an S corporation, or as a member of
Line 1: Enter        gross      interest,   a pass-through entity. If your business   that is not included on line 11.
dividends,       and   income      from     is taxed by both Michigan and another     Line 8: Enter income from U.S.
obligations or securities of states and     state, the loss must be apportioned.      government obligation (e.g., Series EE
their political subdivisions other than     You must attach a Michigan Schedule       bonds, Treasury notes, etc.), including
Michigan. Add this income even if it        of Apportionment (MI-1040H).              income from U.S. government
comes to you through a partnership,                                                   obligations received through a
S corporation, estate, or trust. You        Line 5: Enter the net loss from the
                                            federal column of your MI-1040D,          partnership, S corporation, or other
may reduce this income by related                                                     pass-through entity. This subtraction
expenses not allowed as a deduction         line 15, or MI‑4797, line 18b(1) as a
                                                                                      must be reduced by related expenses
by Section 265(a)(1) of the Internal        positive number.
                                                                                      used to arrive at AGI.
Revenue Code (IRC).                         Line 6: Enter the total of the
                                                                                      Investment companies that invest
Line 2: Enter the deduction taken           following (attach a schedule if
                                                                                      in U.S. obligations are permitted to
for self-employment tax on your             necessary):
                                                                                      pass the tax-free exemption to their
federal return and for other taxes          • Add, to the extent not included in      shareholders.
on or measured by income, such as           AGI, the amount of money withdrawn
your share of city income tax paid                                                    If income from U.S. government
                                            in the tax year from a Michigan           obligations exceeds $5,000, attach
by partnerships or S corporations,          Education Savings Program (MESP)
or your share of the taxes paid by an                                                 a copy of your U.S. Schedule B
                                            account, including the MI 529 Advisor     or Schedule 1 listing the amounts
estate or trust.
                                            Plan (MAP), if the withdrawal was         received and the issuing agency.
Line 3: Use Michigan Adjustments of         not a qualified withdrawal as provided
Capital Gains and Losses (MI-1040D)         in the MESP Act. You may first            Capital gains from the sale of U.S.
only if you have capital gains or           exclude any amount that represents a      government obligations must be
losses attributable to: (1) an election     return of contributions for which no      adjusted on MI‑1040D.
to use Section 271 treatment for            deduction was claimed in any prior        Line 9: Enter compensation received
property acquired before October 1,         tax year.                                 for active duty in the U.S. Armed
1967; (2) the sale or exchange of U.S.      • Amount of NOL deduction (NOL            Forces included in AGI. Include
obligations which cannot be taxed by        carryforward) used to reduce AGI          military retirement on line 12.
Michigan; or (3) the sale or exchange       (see page 7).
of property located in other states.                                                  Note: Compensation       from the
                                            • Refund received from a Michigan         U.S. Public Health Service is not
If you reported gains on U.S. Form          Education Trust (MET) contract. If        considered military pay.
4797 on property acquired before            you deducted the cost of a MET
October 1, 1967, or located in other                                                  Line 10: Enter the gains from the
                                            contract in previous years and            federal column of your MI‑1040D,
states, adjust the gain on the Michigan     received a refund from MET during
Adjustments of Gains and Losses                                                       line 14, and MI-4797, line 18b(2). See
                                            2010 because the MET contract was         instructions for Michigan Schedule 1,
From Sales of Business Property             terminated, then enter the smaller of:
(MI‑4797).                                                                            line 3.
                                            (1) the refund you received or (2) the
Enter gains from the Michigan               amount of the original MET contract       Line 11: Income Attributable to
column of MI-1040D, line 14, and            price (including the application and      Another State. Nonresidents and part-
MI-4797, line 18b(2). Instructions are      processing fees) which you deducted       year residents, complete Schedule NR.
with each form.                                                                       See instructions on page 40. Attach
                                            in previous years.
                                                                                      federal schedules.
12
Business income that is taxed by           • Benefits paid to a senior citizen         and Retirees” on Treasury’s Web site
Michigan and another state must be         (age 65 or older) from a retirement         at www.michigan.gov/incometax.
apportioned. You must complete and         annuity policy that are paid for life (as   For public and private pension or
attach MI-1040H.                           opposed to a specified number of            retirement benefits, you may not
Capital gains from the sale of real        years).                                     subtract:
property or tangible personal property     You may subtract all qualifying             • Amounts received from a deferred
located outside of Michigan must be        retirement and pension benefits             compensation plan that lets the
adjusted on MI-1040D.                      included in AGI and received from           employee set the amount to be put
Michigan residents cannot subtract         the following public sources:               aside and does not set retirement age
salaries and wages or other                • The State of Michigan                     or requirements for years of service.
compensation        earned       outside   • Michigan local governmental units         These plans include, but are not
Michigan. However, they may be             (e.g., Michigan counties, cities, and       limited to, plans under Sections
entitled to a tax credit for income tax    school districts)                           401(k), 457, and 403(b) of the IRC.
imposed by government units outside        • Tier 2 railroad retirement                • Amounts received before the
Michigan (see page 16).                    • Federal civil service                     recipient could retire under the plan
                                           • Military retirement from the U.S.         provisions, including amounts paid on
Residents may subtract:                                                                separation,       withdrawal,       or
• Net business income earned in            Armed Forces.
                                                                                       discontinuance of the plan.
other states and included in AGI, and      If all qualifying retirement and            • Amounts received as early retirement
• Net rents and royalties from real        pension benefits were received from         incentives, unless the incentives were
property or tangible personal property     public sources, enter the total of all      paid from a pension trust.
located or used in another state.          benefits on line 12. If all qualifying
                                           retirement and pension benefits             Line 13: Senior citizens (age 65
Line 12: Qualifying retirement and         were received from private sources,         or older) may subtract interest,
pension benefits included in your AGI      enter the smaller of:                       dividends, and capital gains included
may be subtracted from income. The                                                     in AGI. This subtraction is limited
amount you may subtract depends on         • The total of all qualifying private       to a maximum of $10,058 on a single
the source of the benefit (public or       pensions included in AGI, or                return or $20,115 on a joint return.
private).                                  • $45,120 if you are a single filer,        However, the maximum must be
                                           $90,240 if you are married and filing       reduced by the retirement pension
Note:     Pension/Interest/Dividends/      jointly.
Capital Gain Estimator. Certain                                                        subtraction claimed on line 12. For
amounts of interest/dividends/capital      If you received a combination               help in calculating this subtraction,
gains and pension distributions are        of qualifying public and private            see “Information for Senior Citizens
subtractable from taxable income. An       retirement and pension benefits,            and Retirees” on Treasury’s Web site
online estimator is available to assist    follow these steps to compute your          at www.michigan.gov/incometax.
taxpayers in determining what amounts      deduction:                                  Line 14: Enter only the taxable
can be subtracted. Visit Treasury’s        Step 1: Add all qualifying public           portion of Social Security and Tier
Web site at www.michigan.gov/taxes         retirement benefits included in AGI.        1 railroad benefits included on your
and select Pension Estimator from the                                                  U.S. Form 1040, line 20b, or your U.S.
Quick List, Services dropdown menu.        Note: If your public retirement             Form 1040A, line 14b. Do not include
                                           benefits are greater than the               your total Social Security benefits.
Qualifying benefits include:               maximum amounts ($45,120 single
• Pension plans that define eligibility    filer or $90,240 married, filing            Line 15: Renaissance Zone deduc-
for retirement and set contribution        jointly) you are not entitled to claim a    tion. To be eligible you must meet all
and benefit amounts in advance             subtraction for private pensions.           the following requirements:
• Qualified retirement plans for the       Step 2: If you are a single filer,          • Be a permanent resident of a
self-employed                              deduct the amount in step 1 from            Renaissance Zone for at least 183
• Retirement distributions from a          $45,120. If you are married filing          consecutive days.
401(k) or 403(b) plan attributable to      jointly, deduct the amount in step 1        • Be approved by your local
employer contributions or attributable     from $90,240.                               assessor’s office.
to employee contributions to the                                                       • Must not be delinquent for any
extent they result in matching             Step 3: Add all qualifying private          State or local taxes abated by the
contributions by the employer              pensions included in AGI.                   Renaissance Zone Act.
• IRA distributions received after         Step 4: Determine which is smaller,         • Must file MI-1040 each year.
age 59½ or described by Section 72(t)      the amount computed in step 2 or the        • Have gross income of $1 million or
(2)(A)(iv) of the IRC (series of equal     amount computed in step 3.                  less.
periodic payments made for life)           Step 5: Add the amount computed             If you were a full-year resident of a
• Benefits from any of the previous        in step 1 to the amount determined in       Renaissance Zone, you may subtract
plans received due to a disability, or     step 4 and enter the total on line 12.      all income earned or received.
as a surviving spouse if the decedent                                                  Unearned income such as capital gains
qualified for the subtraction at the       For help in calculating this subtraction,
                                                                                       may have to be prorated. If you lived
time of death                              see “Information for Senior Citizens
                                                                                                                          13
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