Michigan State Tax Help
- Gross expenses from nonferrous metallic minerals extraction (subject to Michigan severance tax) to the extent deducted in AGI. You should also subtract the related income on the Michigan Subtractions screen.
- To the extent not included in AGI, the amount of money withdrawn in the tax year from a Michigan Education Savings Program (MESP) account, including the MI 529 Advisor Plan (MAP), if the withdrawal was not a qualified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.
- 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 2013 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.
Every state that has a sales tax has a companion tax for purchases made outside that state, by catalog or over the Internet. In Michigan, that companion tax is called the "use tax", but it might be described more accurately as a remote sales tax because it is a 6 percent tax owed on purchases made outside of Michigan.
For more information on use tax, see the 2013 Michigan 1040 individual income tax instructions booklet at the Michigan Department of Treasury website.
- Your homestead must be in Michigan, and it is where you maintain a permanent residence. Note: You can have only one homestead at a time and you must be the occupant as well as the owner or renter.
- You are not a full-time student who is claimed as a dependent on another person's income tax return.
- You do not live in college or university-operated housing (including dormitories, residence halls, or apartments).
- Your income is within the qualifying income levels. (we'll take care of this requirement for you)
- You own farmland.
- You have entered into a Farmland Development Rights Agreement (FDRA) with the Michigan Department of Agriculture and Rural Development (MDARD).
- You are eligible to file Form MI-1040.
Caution: The FDRA restricts development of your land. Before making any changes to property covered under this agreement or to its ownership, consult the Michigan Department of Agriculture and Rural Development (MDARD). Some changes may make your property ineligible for credit.
When you create a Joint Owners Agreement record, you will indicate your percentage of income and your percentage of ownership.
Remember, 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 only owe the difference.
Note: The full 6 percent use tax is owed on purchases made in a foreign country.
Examples of tangible personal property subject to use tax are clothing, electronics, furniture, jewelry or books. Examples of tangible personal property not subject to tax are grocery food items, prescription drugs, vitamins, newspapers and periodicals.
- Compensation for damages to character or for personal injury or sickness
- Adoption subsidies
- An inheritance (except for an inheritance from your spouse)
- Proceeds of a life insurance policy paid on the death of the insured (except for benefits from a policy on your spouse)
- Death benefits paid by or on behalf of an employer
- Ministers housing allowance
- Scholarship, stipend, grant, or GI bill benefits and payments made directly to an educational institution
- Forgiveness of debt (e.g. mortgage foreclosure etc.)
- Reimbursement from dependent care and/or medical care spending accounts
- Payments made on your behalf except government payments made directly to 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) Note: If payment is made from money withheld from your benefit, the payment is part of household income. (For example, the DHS may pay your rent directly to the landlord.)
- 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 prizes
- 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.
- Most payments from The Step Forward Michigan program
What is the maximum amount I can deduct from my contributions to my Michigan Education Savings Program (MESP)?
- If you purchased a MET payroll deduction or monthly purchase contract, you may deduct the amount paid on that contract during 2013 (not including fees for late payments or insufficient funds). You should receive an annual statement from MET specifying this amount.
- If you purchased a MET contract during 2013, you may deduct the total contract price (including the processing fee).
- If you made a charitable contribution to the MET Charitable Tuition Program during 2013, you may deduct the total contribution amount. You will receive a statement from MET to confirm the amount.
- The amount included in AGI as income to the purchaser because the MET contract was terminated.
- Be a permanent resident of a Renaissance Zone designated prior to January 1, 2012, for at least 183 consecutive days
- Be approved by your local assessor's office
- Must not be delinquent for any state or local taxes abated by the Renaissance Zone Act
- Must file an MI-1040 each year
- Have gross income of $1 million or less
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 credit 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.
- The gross income from extraction of nonferrous metallic minerals (subject to Michigan severance tax) to the extent included in federal AGI. You should also add back the related expenses on the Michigan Additions screen.
- Any portion of a qualified withdrawal from an MESP account, including the MAP, to the extent included in federal AGI. Note: Any amounts not included in AGI or that are already deducted on the U.S. Form 1040 to arrive at the AGI do not qualify for this subtraction
- Benefits from a discriminatory self-insured medical expense reimbursement plan, to the extent these reimbursements are included in AGI
- 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
- Holocaust victim payments
You may NOT subtract:
- Pension and retirement benefits should not be subtracted here. We'll ask you about your retirement income separately.
- 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
- 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 show on your Schedule W, Table 1, in the appropriate box.
This credit, for most people, is based on a comparison between the household income and property taxes paid. Homeowners pay property taxes directly, and renters pay them indirectly with their rent.
The credit is designed to give the greatest property tax relief to senior citizens, disabled or blind persons, and disabled veterans as well as the surviving spouse of a veteran. Michigan residents who are not in these groups but have income below certain thresholds may also qualify for the credit.
You may not claim rent paid for vacant farmland when computing your property tax credit claim. Farmland owned by an LLC may not be claimed for a homestead property tax credit by one of the individual members.
- Your homestead (the place where you have your permanent home, the place you plan to return to whenever you go away) is in Michigan.
- You were a resident of Michigan for at least 6 months during the year.
- You pay property taxes or rent on your Michigan homestead.
- You were contracted to pay rent or own Michigan homestead you live in.
- Your household resources are less than $50,000.
- Your homestead's taxable value is below $135,000.
- Enter any estimated tax payments you made for 2013.
- Enter any amounts credited from your 2012 return.
- Enter any amount prepaid with extension requests.