New Developments in Michigan Personal Income Taxes
New developments will affect many Michigan residents’ personal income taxes this year. The Michigan Department of Treasury recently issued a release that highlights some of these developments, including information on forms that have been added and discontinued for tax year 2012, as well as certain credit, deduction and exemption amount adjustments. Below are some of the highlights:
Tax form changes for 2012. The following forms are new for tax year 2012:
• Pension Schedule – Form 4884
• Amended Income Tax Return for 2012 tax year: Taxpayers must use Form MI-1040X-12
• Nonrefundable Credits 0- Schedule 2
• College Tuition and Fees Credit – Schedule CT
• Energy Efficient Qualified Home Improvement Credit – Form 4764
• Qualified Adoption Expenses – Form MI-8839
Household Income replaced by Total Household Resources, which now excludes net losses from business (including farm), rental and royalties and also excludes net operating costs.
Homestead Property Tax Credit (MI-1040CR) changes. All pages of the credit must be completed or the credit cannot be passed. Homesteads with a taxable value over $135,000 are not eligible for this credit.
Personal exemption allowances. The personal exemption allowance is increased and equates to an annualized amount of $3,763 for 2012.
Pension and interest deduction. Beginning in 2012, pensions and retirement benefits will be taxed differently depending on the birth year of the recipient. Senior citizens age 67 or older may be able to deduct part or all of their interest, dividends and capital gains that are included in AGI.
Property tax credits/refunds. Michigan homestead property tax credit and State or local refunds received in 2012 may be taxable on a taxpayer’s 2012 U.S. 1040.
Please keep in mind this is just a brief overview of the new individual income tax developments for 2012. For more detailed information, please click here.