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Scenario 6

Joint filers born during the period January 1, 1946, through December 31, 1952, with the older spouse born in 1948 and receiving benefits from Qualified Fire, Police, and County Corrections Service from a deceased spouse born in 1952.

John and Susan are filing a joint return. John, born in 1948, is receiving public pension benefits of $45,000 and $5,000 in wages from a part-time job. Susan, born in 1951, is receiving public pension benefits of $60,000. Susan’s deceased spouse, Patrick, was born in 1952 and died in 2015. Susan is receiving $25,000 in surviving spouse pension benefits from Patrick’s service as a City of Detroit firefighter.

Step 1:

John and Susan refer to the Form 4884 instructions in the MI-1040 Booklet and completes “Which Section of Form 4884 Should I Complete?”

They answer the questionnaire as follows:

  • Question 1 - Yes
  • Question 2 - Yes, as Susan is receiving Patrick's retirement and pension benefits from his service as a Qualified Fire, Police, and County Corrections Officer. Also, since John is the older spouse and has reached the age of 67, they are instructed to complete and compare Worksheet 2 and Section A of Form 4884.

Step 2:

John and Susan complete Worksheet 2 and determine that their Tier 2 Michigan Standard Deduction would equal $55,000. As Susan is receiving retirement and pension benefits from Patrick’s SSA exempt employment they had previously checked box 24G on Schedule 1, which indicates their maximum Tier 2 Michigan Standard Deduction would increase by $15,000.

Step 3:

John and Susan then review Section A of Form 4884 to determine which provides them the greater benefit.

  • Line 9 - Enters $123,036 as they are married filing jointly.
  • Line 10 – Leave blank as it does not apply to them.
  • Line 11 – Enters $123,036 after subtracting line 10 from line 9.
  • Line 12. – Enters $130,000, their total public retirement and pension benefits.
  • Line 13 – Enters $0 after subtracting line 12 from line 11.
  • Line 14 – Enters $0, their total private retirement and pension benefits.
  • Line 15 – Enters $0, the smaller of lines 13 or 14.
  • Line 16 – Enters $130,000 after adding lines 12 and 15.

Step 4:

John and Susan elect to claim the retirement and pension benefit subtraction ($130,000) instead of their Tier 2 Michigan Standard Deduction ($55,000) because it provides them a greater benefit.

Step 5:

John and Susan proceed with completing Form 4884 and Section A. They enter their information on lines 1 through 5 and check box 6a but skip box 6b. Since Susan is receiving retirement and pension benefits from a deceased spouse she completes Part 2. In Part 3, they fill out a separate line for each retirement and pension benefit distribution, checking the box for “Public” under 8A for their public retirement and pension benefits. For any amount received from a deceased spouse they check the box under 8B on the corresponding line.

Step 6:

John and Susan carry the amount from Form 4884, line 16 (Section A) to Schedule 1, line 27.