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What is the filing obligation of the beneficiary?

Both resident and nonresident beneficiaries may have an obligation to file a Michigan income tax return. Refer to the MI-1040 instruction booklet to determine individual filing requirements and Revenue Administrative Bulletin 2015-15 Taxability of Income to Estates, Trust, or Beneficiaries. If an MI-1040 is required, include copies of the following:

  • U.S. Schedule K-1 including footnotes.
  • The letter received from the fiduciary notifying the beneficiary of Michigan adjustments or Michigan income.
  • MI-1040D, if the beneficiary is eligible to adjust gains and losses under Section 271 of the Michigan Income Tax Act.

Note: Excess deductions available upon termination of an estate or trust may be passed on to the beneficiaries. They are reported on U.S. Form 1040, Schedule A, and do not reduce federal adjusted gross income (AGI). Itemized deductions are not an allowable subtraction on the MI-1040. Michigan follows the federal guidelines regarding the termination of an estate or trust and the treatment of any unused NOL carryover. To be eligible to claim the unused NOL carryover, a copy of the final U.S. Form 1041 Schedule K-1 must be included with the filing.