Michigan City Income Tax Guidelines 2019

2019 Michigan City Income Taxes 1

MI City Income Tax Who must file: Persons who owe tax or are due a refund Residents whose AGI exceeds the personal exemption for that city Non- / Part-year residents whose city wages exceed the personal exemption Residents who file a Federal return (even if no city tax is owed) should file 2

MI City Income Tax CF-1040 23 MI Cities have local income taxes; all except Detroit accept Common Form 1040 TaxSlayer now uses CF-1040 for Port Huron Return must be paper filed print two copies Suggestion create City Common Return printset for filing copy, including CF-1040 and Federal 1040 & Schedules B,C,D,E 3

MI City Income Tax CF-1040 Special Exemptions vary by city Exclusions/Adjustments may vary by city Tax rates vary by city Detroit area example: City Resident Non-Resident Detroit 2.4% 1.2% Pontiac 1.0% 0.5% Highland Park 2.0% 1.0% Hamtramck 1.0% 0.5% 4

Personal Exemptions By City 5

Tax Rates / Exemption Amounts 6

MI City Income Tax CF-1040 The CF-1040 is a software-only template TaxSlayer s handling of CF-1040 has improved most situations can be handled correctly You may be able to start a CF-1040 in TS, print it and complete by hand (for more complex returns) 7

MI City Income Tax Alternatively, city-specific tax forms are available on the Michigan.gov tax website Prepare each city return manually using their specific instructions 8

Michigan.gov/taxes 9

Michigan.gov/taxes 10

Michigan.gov.taxes 11

Michigan.gov/taxes Link to appropriate city & download city-specific instructions, fillable pdf &/or printable copies of forms. Refer to these as you complete TaxSlayer input. 12

Other MI Cities CF-1040 Overall format of CF-1040: Column A = Federal 1040 plus/minus Column B = Exclusions & Adjustments Less: Exemptions equals Column C = Taxable Income 13

Sample CF-1040 Format Flow through from Federal data 14

Sample CF-1040 Format Federal 1040 Less: Exclusions/Adjustments Equals: Taxable Income 15

TaxSlayer Input MI CF-1040 On the first screen of the MI return Select Localities 16

MI Cities CF-1040 Select MI City Form CF-1040 17

CF-1040 Residency Screen Choose Residency To change residency, you must delete the LOCAL return and start over 18

CF-1040 Input Screens 19

CF-1040 Basic Information Select City Input any Special Exemptions per City rules Must input addresses below 20

MI Cities Income Tax - TaxSlayer Use the city tax instructions as a guide Note differences in exemptions, exclusions, adjustments depending on city Note differences depending on residency status Begin input in TaxSlayer of data for CF-1040 21

CF-1040 Wages All W-2 s automatically carry to CF-1040 (New for 2019!) Only enter W-2 details to allocate wages or add info (generally, non-residents) Use Wage Allocation for non-resident wages earned OUTSIDE taxing city (worked in multiple locations, or second job outside city) and therefore not taxable Non-residents should add dates of employment and Address of Workstation (not employer W-2 address) Withholding City Name must be entered correctly in Federal input section, or no withholding appears! 22

CF-1040 Wages 23

CF-1040 Wages 24

CF-1040 Pensions & IRAs Must enter all 1099-R s exempt from tax Different input lines for IRA s vs Pensions (if input on wrong line, won t be excluded) EIN and all $ s must match Federal EXACTLY (or income won t be excluded) First place to look if 1099-R was not excluded typo s or rounding in local 1099-R input 25

CF-1040 Adjustments to Income Schedule TC used to allocate income sources for part-year residents, and to exclude Sched C income for non-residents 26

Schedule TC Used for part-year residents (generally) May have income taxable at Resident and Non-Resident rates (had earnings in city before and after move) Complex form review carefully Non-Residents with Schedule C income use Schedule TC / Business Income allocation to exempt income earned outside city 27

Credit for Taxes Paid to Another City Taxpayer lived in one taxing city, worked in another taxing city earnings taxed by both Resident City will give credit for taxes paid to non-resident city Credit is at LOWER of actual tax paid or non- resident calculation for Resident City (rates and exemptions may differ) Example: Pontiac resident working in Detroit pays 1.2% to Detroit, but gets credit for 0.5% on Pontiac return 28

Credit for Taxes Paid to Another City TaxSlayer only allows 1 version of CF-1040 in the program Prepare non-resident return first, review, and print 3 copies Delete non-resident return, and prepare resident return including credit for tax Include a copy of non-resident return with the return mailed to Resident City 29

Mi Cities CF-1040 Continue back out through the input screens until the Fed & MI tax due/refund amount recalculates to ensure data is saved Review preliminary CF-1040 from the print pdf Confirm all adjustments/exclusions follow specific city rules Make any corrections needed may require finessing TaxSlayer input 30

MI Cities CF-1040 In complicated cases, or when TaxSlayer input is confusing or uncooperative: It may be easier to complete a tax return manually for the client (using the beginning of the CF-1040 or the city form) Remember: the client must paper file the form either way 31

MI Cities CF-1040 If you are completing a paper return (manually or using a fillable pdf), be extremely careful during the Quality Review All arithmetic must be done manually and checked carefully Must be done on originator s computer Can be very time consuming 32

MI Cities Paper Return When filing a paper return Print two copies for client one to mail & one for their file Print extra copy of Federal forms that must be attached to the return Federal 1040 Page 1 & Schedules B, C, D, E Other city return (credit for taxes paid to other city) Taxpayer should attach W-2 s & 1099-R s (if taxable) 33

MI Cities Paper Return Copies to mail must be printed 1-sided, not 2-sided Printing Suggestion Create new print set, City Common Return , for copy to be mailed Include CF-1040 and Federal 1040 Page 1 & Schedules B, C, D, E 34

MI Cities Paper Return Instruct the client that they must sign and mail in the return with their payment (if owed) Give them the extra copies of Federal forms to attach Explain what other forms they should attach (usually shown on front of city return in the left margin) 35

Michigan Cities Questions? Comments? 36