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Credits 17. If a taxpayer calculates a negative tax due after credit (in other words, a refund) does the taxpayer file using the lesser refund?
Yes. MCL 208.1500(4) states that a taxpayer's tax liability under [the MBT] shall be "the greater of" (1) the determined MBT liability after application of all credits, deductions, and exemptions and any unused credit carryforwards, or (2) the determined CIT liability after all credits, deductions, and exemptions under the CIT, less the amount of the certificated credits, including unused certificated credit carryforwards, the taxpayer was allowed to claim under the MBT.
For example: Consider a taxpayer with a refundable credit of $1000 and tax liability before credits in MBT of $300; this would result in a $700 refund. Part (2) of the calculation, the hypothetical CIT liability, computes to $100; resulting in a $900 potential refund. Because, negative $700 is a greater tax liability than negative $900, the taxpayer will be entitled to a $700 refund.