Archive for December, 2011

19
Dec
11

Michigan Tax Law changes 1/1/2012

INCOME TAX CHANGES FOR INDIVIDUALS AND TRUSTS EFFECTIVE TAX YEAR 2012 (FOR RETURNS FILED IN 2013)

New legislation does not apply to returns thru April 2012, but returns that are due in April 2013.

Be aware of the following:

  • Tax rates
    • The rate remains at 4.35 % for tax year 2012.
    • For 2013 and each tax year thereafter the rate is 4.25%.
  • Personal exemption set at $3,700 (same as under current law) and will be indexed to inflation beginning in 2013.
    • Repeals special exemptions for seniors. & unemployment compensation greater than 50% of adjusted gross income (AGI).
    • Special exemption for disabled and exemption for disabled veterans – unchanged.
    • Phases out certain pension and retirement income subtractions based on date of birth.
  • Repeals
    • certain miscellaneous deductions (political donations; prizes won in state-regulated bingo, raffle, or charity games; charitable gifts from retirement plans).
    • the $600 deduction for children 18 and under.
    • Non-refundable Credits: for city income taxes, public contributions, credit for contributions to homeless shelters, food banks, and community foundations, automobile donations, college tuition and fees, reduces the Earned Income Tax Credit from 20% to 6%, excess adoption expense credit, stillbirth credit.
  • Changes the homestead property tax credit as follows:
    • Household income is replaced by total household resources which excludes losses from business, rentals and royalties and also excludes net operating losses.
    • Available only for homes with taxable value of less than $135,000.
    • For senior claimants: Full credit of 100% if total household resources are $21,000 or less and reduced by 4% for each additional $1,000 in total household resources until $30,000 is reached. For total household resources of $30,000 to $41,000 senior claimants receive 60% of the credit.
    • All other claimants are eligible for 60% of the tax credit. Credit phase out begins at $41,000 of total household resources and is reduced by 10% for each $1,000 increase. Complete phase-out at $50,000.
    • Alternative credit for eligible service person/veteran is still available.



Follow

Get every new post delivered to your Inbox.

Join 33 other followers