New Developments for Tax Year 2016

Annual mailing of instruction booklets

The MI-1040, MI-1040CR-2, MI-1040CR-5 and MI-1040CR-7 instruction booklets will be mailed to taxpayers who paper filed their 2015 return on Michigan Department of Treasury forms. Taxpayers who e-filed or had a tax preparer complete their forms will not be mailed a booklet.

Forms and instructions may be viewed and/or downloaded from our Web site beginning in January 2017. In addition, commonly used forms will continue to be available at Michigan Department of Treasury offices, most public libraries, Northern Michigan post offices, and Michigan Department of Health and Human Services (MDHHS) county offices.

Note: Bulk forms are distributed to libraries and post offices throughout the state before they are available in Michigan Department of Treasury offices. Therefore forms may not be requested through the Michigan Department of Treasury customer contact center until mid-February.

Reminder: All pages of all forms must be completed and filed to be considered a complete return.

Direct Debit

Taxpayers may elect to use direct debit when e-filing their 2016 tax due returns.  A direct debit is a tax payment that Michigan Department of Treasury electronically withdraws from the taxpayer’s bank account using the bank information provided on the electronically filed return. Submitting the electronic return with the direct debit information provided acts as the taxpayer’s authorization for Michigan Department of Treasury to withdraw the funds from their bank account. Direct debit is available for both the Michigan and City of Detroit returns.

Collections is now accepting credit and debit card payments for any past due debts

The Office of Collections is now accepting credit/debit card payments for online payments only. There is a processing fee of 2.48% for all transactions. You can use a valid Discover, MasterCard or Visa credit card or a valid MasterCard or VISA debit card to make payment. View more information.

IRS Refund Delays in 2017

A new law (IR-2016-152) requires the IRS to hold refunds until mid-February in 2017 for taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit. In addition, identity theft and refund fraud safeguards put in place by the IRS may result in delayed processing of tax returns. This delay will not impact Michigan Department of Treasury.

Tax form information changes for 2016:

  • Authorized Representative Declaration (Power of Attorney) Form 151:

This revised form authorizes another person or corporation, (tax preparer, family member, etc.) as your representative in tax or debt matters before the Michigan Department of Treasury.

View Form 151 information
Authorized Representative Declaration Video

  • Michigan Individual Income Tax Return (MI-1040):

Exemption allowances and the tax rate remain the same as tax year 2015:

  • $4,000 for exemptions claimed on the federal return
  • $2,600 for special exemptions
  • $400 for qualified disabled veterans
  • 4.25% tax rate
  • Schedule 1 Additions and Subtractions:
    • Line 17 or 22 - The Michigan ABLE Act, signed into law October 28, 2015 and made effective January 26, 2016, created a new savings program under the authority of Internal Revenue Code Section 529A, which is aimed at encouraging and assisting individuals and families to save private funds to support individuals with disabilities. A deduction may be taken on the Michigan income tax return for contributions made to an ABLE account to the extent included in Adjusted Gross Income (AGI). The maximum deduction is $5,000 for a single filer ($10,000 for a jointly filed return). The amount deducted includes total contributions made to the plan less qualified withdrawals made during the tax year. Distributions from the account must be used to pay for qualified disability expenses of the eligible designated beneficiary of the account. The program is administered by Treasury and will be similar to Treasury’s administration of higher education savings accounts (529 Plans).
    • Line 24 - Michigan Standard Deduction. Taxpayers who were born during the period January 1, 1946 through January 1, 1950, that reached age 67 on or before December 31, 2016 may be eligible for a subtraction of $20,000 for single filers or $40,000 for joint filers against all income, rather than solely against pension and retirement income.
      Note: Filers who qualify for the Michigan Standard Deduction should not complete form 4884.
    • Line 26 - Dividend/interest/capital gains deduction for taxpayers 71 years and older. This deduction is limited to $11,115 for single or married filing separately filers or $22,229 for joint filers, less any deduction for retirement benefits. (See page 14 in the MI-1040 Instruction Booklet)

Dividends/Interest/Capital Gain Deduction Estimator

  • Homestead Property Tax Credit Claim (MI-1040CR):

    If you are a resident of a special housing facility (Nursing Home, Home for the Aged and Adult Foster Care), base your claim on rent only. Do not include other services. If you pay rent with other services and you are unable to determine the portion that constitutes rent only, you may determine your portion of the property taxes that can be claimed for credit based on square footage, or, divide the taxes by the number of residents for whom the home is licensed to care. This information may be obtained from your housing facility.
     
  • Michigan Voluntary Contributions Schedule (Form 4642):

    Two new funds have been added
    • American Red Cross Michigan Fund
    • Michigan Junior Achievement Fund
       
  • Pension Schedule (Form 4884):
    • Taxpayers born before 1946 may subtract private pensions up to $49,861 for single or married filing separately filers and $99,723 for joint filers.
    • Taxpayers born during the period January 1, 1946 through January 1, 1950 should not file form 4884. A single filer may subtract $20,000 against all income and joint filers may subtract $40,000 against all income as the Michigan Standard Deduction on Schedule 1, line 24.
    • Taxpayers born during the period January 2, 1950 through December 31, 1952 may subtract retirement and pension benefits of $20,000 for single filers and $40,000 for married filing jointly
    • Taxpayers born after 1952, may not deduct pension benefits unless the older of you or your spouse (if married filing jointly) meets all of the following conditions:
      • Was born during the period January 1, 1953 through January 2, 1955
      • Has reached age 62
      • Receives Social Security exempt retirement benefits due to employment with a governmental agency.

For more information, see page 17 in the MI-1040 Instruction Booklet

Pension Deduction Estimator

  • Home Heating Credit (MI-1040CR-7):

    Standard Allowances and Income Ceilings for 2016 (See Tables A and B below). Note: The last
    day to file a 2016 Home Heating Credit is September 30, 2017. No filing extensions are allowed.

 

TABLE A: 2016 Home Heating Credit (MI-1040CR-7) Standard Allowance

NOTE: If you lived in your homestead for less than 12 months, you must prorate your standard allowance (see instructions in the MI-1040CR-7 booklet).

EXEMPTIONS

STANDARD ALLOWANCE

INCOME CEILING

0-1

$458

$13,070

2

$618

$17,642

3

$777

$22,185

4

$937

$26,756

5

$1,096

$31,299

6

$1,255

$35,842

 

+ $160 for each
exemption over 6

+ $4,571 for each
exemption over 6


TABLE B: 2016 Home Heating Credit (MI-1040CR-7) Alternate Credit Computation

EXEMPTIONS

MAXIMUM INCOME

0-1

$13,826

2

$18,605

3

$23,389

4

$24,018

 

Additional Information:

e-Payments

Individual Income Tax (IIT) filers have the option of making payments electronically using the Michigan Department of Treasury’s e-Payments system. Payments can be made by using, electronic payment (eCheck), credit card or debit card.

Free E-file

E-file lets you submit your Michigan, City of Detroit and federal individual income tax returns using a computer instead of mailing paper returns. You can e-file your Michigan and/or City of Detroit return separately from your federal return (State Standalone e-file). If you choose to e-file your Michigan tax return, visit Treasury’s Web site at MIfastfile.org for a list of e-file resources, how to find an e-file provider, and more information on free e-file services.

The Internal Revenue Service (IRS) will begin accepting federal tax returns on January 23, 2017.

There are many free tax preparation services available. To find out if you qualify and/or to locate a free preparation site near you, visit the following sites:

  • Free tax preparation assistance offered by IRS Volunteer Income Tax Assistance (VITA) and
    the Tax Counseling for the elderly programs. Enter your zip code to locate a site near you.
    http://irs.treasury.gov/freetaxprep/

  • You may be eligible to prepare and e-file your federal return for free with Free File through
    the IRS Web site.

Treasury Offset Program (TOP)

Michigan Department of Treasury has entered into an agreement with the Internal Revenue Service (IRS) to intercept, or offset, federal tax refunds and federal payments for delinquent Michigan Department of Treasury income tax debts.

View more TOP information

Pension Estimator and Dividend/ Interest/Capital Gain Estimator

Certain amounts of pension distributions and dividend/interest/capital gains can be subtracted from Michigan taxable income. An estimator is available on Treasury's Web site to assist taxpayers in determining what amounts can be subtracted and to assist in making income tax return preparation easier.

Property Tax Credits / Refunds

Michigan homestead property tax credit and State refunds from Michigan Department of Treasury received in 2016 may be taxable on your 2016 U.S. 1040. If you have questions about the taxability (for federal tax purposes) of your refunds, call the IRS at 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, 2017, 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 No Longer Mailed to Taxpayers Using Preparers

Treasury does not mail preprinted Estimated Individual Income Tax Vouchers to taxpayers who use tax preparers to complete and file their income tax returns.

Statute of Limitations for Prior Year Returns and Credits

A taxpayer must file to claim a refund with the Michigan Department of Treasury within four years from the date set for the filing of the original return. For example: You must file a 2012 Michigan Individual Income Tax Return (MI-1040/MI-1040X-12) and/or a Homestead Property Tax Credit (MI-1040CR/MI-1040CR-2) on or before April 15, 2017.