Michigan Taxes

[cbesaw]

QUOTE=cbesaw]

Any Michiganders out there? I have a client who is 56 yrs old and his wife is 67 yrs old. The only thing on their return is W-2 wages and a little bit of social security income. Last year in 2012 Gov Snder changed all the Michigan tax laws and pensions became taxable. If you were born before 1946 you could still subtract pensions under the old law. If you were born between 1946 and 1952 you can subtract $20,000 single, $40,000 married. But this year 2013 they added some new lines. If you were born in 1946 or the older spouse was born in 1946 are eligible for a deduction against all income and will no longer deduct pension benefits. So my client is able to deduct $40,000 off his wages on the Michigan return, it is a huge refund. It does not make any sense, but that is what it says in the Michigan tax booklet in black and white. So if you were born in 1946, it is a magic year for you! Anybody else come across this? Is it just a fluke for this year or will it continue next Year?

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[bgiez]

1946 is the magic year for TY 2013 & next year the magic year for 2014 will be 1947.

QUOTE=cbesaw]

[/QUOTE]

Well, really it's not a magic year, it's a magic age.

It's when the taxpayer or spouse, whoever is older, reaches the age of 67, there is no more subtraction for pension. The subtraction is for income. This was done because they saw the inequity of a retired person/couple being able to subtract up to $40,000 for pension, but someone who didn't have a pension and was still working, or living of of investments, rather than a pension not having the same benefit.

There is a nifty chart that explains all that at: http://www.michigan.gov/documents/ta...s_359799_7.pdf

[cbesaw]

Michigan Pension Law

Thank You BGIEZ! That clears it up for me, makes sense. I had that chart last year, don't know where I put it. Thanks for the link, I printed it out again.