I participated in the Step Forward Michigan program. How does this affect my Michigan individual income tax return, homestead property tax credit, and home heating credit?
Funds from the Michigan State Housing and Development Authority (MSHDA) Step Forward Michigan program are generally not reported in federal adjusted gross income; therefore, they are also not included in Michigan taxable income.
In the Step Forward Michigan program, payments are made on behalf of the homeowner directly to the mortgage-holder bank. For purposes of the Michigan homestead property tax credit and home heating credit, payments under the Step Forward Michigan program are considered relief in kind from a governmental agency and should not be included in Total Household Resources.
If the recipient doesn't comply with the terms of the program, the assistance may have to be paid back and would be treated as a loan. Loans are not included in Michigan taxable income or Total Household Resources.
However, if the recipient is unable to repay the loan and the debt is forgiven, to the extent the cancelled debt is included in adjusted gross income, that amount should be included in Michigan taxable income and in Total Household Resources.