Michigan Hurricane Katrina distributions

[mactoolsix]

We have a client lives in Michigan which gives exclusions for all kinds of retirement income. When we finish the return, Lacerte provides a statement for Retirement or Pension Benefits - lists each excluded retirement income item plus "Adjsutment for qualified Hurrican Katrina distributions." The amount excluded is larger than the sum of all the other retirement benefits. We have not entered anything related to Hurrican katrina.

Doses anyone have experience with MI and have any clue what this is?

Thanks,
Mike

[JohnH]

Wow - that hurricane was bigger than I thought!

[mactoolsix]

Wow - that hurricane was bigger than I thought!

That's what we're thinking!

[bgiez]

I've been preparing Michigan tax returns since 1994 and my software doesn't include a form that lists retirement income, although there is such a form related to the Federal.

This sounds like something flowing through from the Federal. Check your input screen for the 1099R input. See if a checkbox got checked in error. In googling Katrina and 1099r box 7, one of the responses talks about being exempt from the 10% penalty for early withdrawal from a retirement account for qualified Katrina distributions, but it looks like the 1099R would have been coded 1, early distribution with something on form 5329 checked to indicate that it was a qualified Katrina distribution. But I would think that 6 years after Katrina, this would not be applicable. Do you have a 5329 with this return?

Babara

[mactoolsix]

I've been preparing Michigan tax returns since 1994 and my software doesn't include a form that lists retirement income, although there is such a form related to the Federal.

This sounds like something flowing through from the Federal. Check your input screen for the 1099R input. See if a checkbox got checked in error. In googling Katrina and 1099r box 7, one of the responses talks about being exempt from the 10% penalty for early withdrawal from a retirement account for qualified Katrina distributions, but it looks like the 1099R would have been coded 1, early distribution with something on form 5329 checked to indicate that it was a qualified Katrina distribution. But I would think that 6 years after Katrina, this would not be applicable. Do you have a 5329 with this return?

Babara

We've done returns for this client for several years, and past returns never had this. I'll check the past returns. I don't believe there was a 5329, I'll check it tomorrow.
Thanks for the help, Barbara

Mike

[mactoolsix]

I've been preparing Michigan tax returns since 1994 and my software doesn't include a form that lists retirement income, although there is such a form related to the Federal.

This sounds like something flowing through from the Federal. Check your input screen for the 1099R input. See if a checkbox got checked in error. In googling Katrina and 1099r box 7, one of the responses talks about being exempt from the 10% penalty for early withdrawal from a retirement account for qualified Katrina distributions, but it looks like the 1099R would have been coded 1, early distribution with something on form 5329 checked to indicate that it was a qualified Katrina distribution. But I would think that 6 years after Katrina, this would not be applicable. Do you have a 5329 with this return?

Babara

Okay, we checked all the inputs (Lacerte), and everything is correct. There is a 5329 from a 2010 Roth conversion with 50% taxable 2011 & 2012 (does not print). This "Katrina" credit is only for Michigan MI-1040CR line 14.

Thanks, Mike

[bgiez]

I've read the instructions for line 14 of the Michigan CR and there is no reference to the Katrina thing. Unfortuantely, I don't have the instructions for earlier years where the Katrina qualified distributions would be in effect. I'm thinking there is a software error related to carrying information from the 5329 to the MI-CR. I suggest contacting your software provider and asking them to look into it. In the meamtime, can you manually override the computer calculated amount and enter the correct total for the line?

[mactoolsix]

I've read the instructions for line 14 of the Michigan CR and there is no reference to the Katrina thing. Unfortuantely, I don't have the instructions for earlier years where the Katrina qualified distributions would be in effect. I'm thinking there is a software error related to carrying information from the 5329 to the MI-CR. I suggest contacting your software provider and asking them to look into it. In the meamtime, can you manually override the computer calculated amount and enter the correct total for the line?

We really appreciate you taking time to look at this for us! We'll find a work around if Lacerte doesn't have explanantion.
Mike