New Developments for Tax Year 2012

• Annual mailing of instruction booklets – The MI-1040, MI-1040CR-2, MI-1040CR-5 and MI-1040CR-7 instruction booklets will continue to be mailed mid to late January to taxpayers who filed their 2011 return on Treasury forms. All forms and instructions may be viewed and/or downloaded from our Web site beginning in January 2013.    In addition, commonly used forms will continue to be available at Treasury offices, most public libraries, Northern Michigan post offices, and Department of Human Services (DHS) county offices.
• Tax form changes for 2012 – New forms have been added and some forms have been discontinued based on Public Act 38 of 2011. View more information
  • New Forms:
    • Pension Schedule - Form 4884
    • Amended Income Tax Return for 2012 tax year - Must Use Form MI-1040X-12
      (Must use form MI-1040X for  2011 and Prior year Amended Returns)
      Note: All pages of a form must be filed to be considered valid. (e.g., MI-1040CR now has 3 pages)
  • Discontinued Forms:
    • Nonrefundable Credits – Schedule 2
    • College Tuition and Fees Credit – Schedule CT
    • Energy Efficient Qualified Home Improvement Credit – Form 4764
    • Qualified Adoption Expenses – Form MI-8839
  • For more information on the 2012 tax form changes view a Breakdown of Tax Year 2012 Changes by Form
• Household Income replaced by Total Household Resources which now excludes net losses from business (including farm), rental and royalties and also excludes net operating losses. View more information
• Homestead Property Tax Credit (MI-1040CR) Changes – The form is now 3 pages and all pages must be completed or the credit cannot be processed.  Homesteads with a taxable value over $135,000 are not eligible for this credit. View more information
• Schedule 1 Additions and Subtractions Changes:
  • Significant changes to pension and retirement subtractions based on a taxpayer’s filing status and year of birth as reported on the new Michigan Pension Schedule – Form 4884.
  • Dividend/interest/capital gains deduction for seniors only available for those born prior to 1946
  • The Venture Capital Deduction is no longer allowed
  • May only subtract the net income (instead of gross income) from Michigan oil and gas royalty interest or working interest that is subject to Michigan severance tax
• Non-Refundable Credits No Longer Allowed:
  • City income tax
  • Public contribution
  • Contributions to homeless shelters, food banks and community foundations
  • Contributions to medical savings accounts
  • Contributions to Individual or Family Development Account
  • Film credit for wage withholding
  • Vehicle donation
  • College tuition and fees
  • Credit for historic rehabilitation plans certified after December 31, 2011
  • Renewable energy surcharge
• Refundable Credit Changes:
  • reduced Earned Income Tax Credit from 20 percent to 6 percent
  • the Qualified Adoption Expenses Credit is no longer allowed
  • the Stillbirth Credit is no longer allowed
  • the Energy Efficient Qualified Home Improvement Credit is no longer allowed

Important Information

• Free E-file is Available. Do You Qualify? — E-file lets you submit your Michigan and federal individual income tax returns using a computer instead of mailing paper returns. You can e-file your Michigan return separately from your federal return (State Standalone e-file). If you choose to e-file only your Michigan tax return, be sure to calculate your federal return first before completing and e-filing your Michigan return. www.MIfastfile.org
• There are many free tax preparation services available. To find out if you qualify, or to locate a free preparation service site near you visit www.michiganeic.org/freetaxprep
• Tax Rate – The income tax rate for 2012 equates to an annualized rate of 4.33%
• Personal Exemption Allowances – The personal exemption allowance increased and equates to an annualized amount of $3,763 for 2012. The special exemption allowance for deaf, blind, hemiplegic, quadriplegic, or totally and permanently disabled is $2,400. The exemption for a qualified disabled veteran is $300. Exemptions for individuals 65 and older, children under 18, and unemployment compensation of 50% or more of your AGI are no longer allowed.
• Pension and Interest Deduction – Beginning in 2012, pensions and retirement benefits will be taxed differently depending on the birth year of the recipient. Any taxpayer taking a subtraction for pension MUST complete the Michigan Pension Schedule (Form 4884). 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. For 2012, the deduction is limited to a maximum of $10,545 for single filers or $21,091 for joint filers. View More Information for Seniors and Retirees
• Pension Interest/Dividends/Capital Gain Estimator – Certain amounts of pension interest/dividends/capital gains and pension distributions are subtractable from taxable income. An estimator is available on Treasury's Web site to assist taxpayers in determining what amounts can be subtracted and to make return preparation easier.Access the estimator at www.michigan.gov/taxes .
• Exemption for Qualified Disabled Veterans – Taxpayers who either have a service-connected disability or have a dependent with a service-connected disability may be eligible to claim a $300 exemption for tax year 2012. View instructions for MI-1040 line 9c. The additional exemption may also be claimed on the Home Heating Credit - MI-1040CR-7. View instructions for MI-1040CR-7 line 11c regarding eligibility.
• Property Tax Credits / Refunds – Michigan homestead property tax credit and State or local refunds received in 2012 may be taxable on your 2012 U.S. 1040. If you claimed an itemized deduction for property or Michigan income taxes on your 2011 U.S. 1040 and then received a refund in 2012 from the State or your local unit of government for a portion of those taxes, you must include that refund as income on your 2012 U.S. 1040. If you have questions about the taxability (for federal tax purposes) of the refunds, call the IRS at 1-800-829-1040.
• Filing Extension Granted for Military Personnel Serving in a Combat Zone – United States military personnel serving in a combat zone on April 15, 2013, will be given 180 days after leaving the combat zone to file their federal and State tax returns and will be exempt from penalties and interest. When e-filing, service men and women serving in combat zones should enter the words "Combat Zone " in the preparer notes. When filing a paper return, print "Combat Zone" in ink on the top of page 1. View More Information for Members of the Military
• MI-1040ES Forms not Mailed to Taxpayers Using Preparers – Treasury no longer mails preprinted estimate forms to taxpayers who use tax preparers to complete and file their tax returns.
• Renaissance Zones – Certain Renaissance Zones, along with the tax benefits, will continue to be phased out . See instructions for Schedule 1, line 15, on page 14 of the MI-1040 instruction booklet.
• Prior Year Returns and Credits – The State of Michigan statute of limitations is four years from the due date set for filing the annual return in order to claim a tax refund and homestead property tax credit.
  For example: You must file a 2008 Michigan Individual Income Tax Return (MI-1040/MI-1040X) and/or a Homestead Property Tax Credit (MI-1040CR/ MI-1040CR-2) on or before April 15, 2013.
• Home Heating Credit Standard Allowances and Income Ceilings for 2012 (See Tables A and B below) Note: The last day to file a 2012 Home Heating Credit is September 30, 2013. No filing extensions are allowed. For more information visit www.michigan.gov/heatingassistance .

TABLE A
Standard Allowance for the Standard Credit Computation

TABLE B
Exemptions and Maximum Income for the Alternate Credit Computation