Michigan Question

[Chief]

I think I know the answer to this question but need clarification. A full time residentof Michigan has pension income from an automobile company in Canada. Is that income taxable to the state of Michigan?

[LawrenceGR]

Maybe not

If this is a private pension I'm pretty sure it is not taxable to Mich unless it exceeds around $42,240 for single and $84480 MFJ. Of course this must be a qualifed retiree.

[Koss]

Canadian Pension

Is the pension included in your client's federal AGI?

That may sound like a silly question. I know that US citizens are taxed on their worldwide income. But there's also a tax treaty between the US and Canada, and other weird stuff out there that could have an impact...

The Michigan return, like most states, begins with federal AGI. So if the pension in question is not included in federal AGI, it's not going to make it into Michigan taxable income.

But even if it is included in federal AGI, the Michigan return appears to allow retirement income to be subtracted from federal AGI when calculating Michigan taxable income.

There are some limitations and special rules that govern this subtraction, so you'll want to look at the instructions for Schedule 1. But on the surface, it looks like it is not subject to Michigan state tax.

BMK

[Chief]

Michigan Income

I agree with you Burton. The income is not subject to state tax. Thanks for the reply. I dont trust my instinct when I get busy.