Level 2

Question

Michigan police pension subtraction

Forum|Forum|2 years ago
February 1, 2024
10 replies
29 views

Michigan police and EMT pensions are supposed to be 100% tax free. How or where is that being addressed on the tax return?

ProSeries Professional

This topic has been closed for replies.

dascpa

Level 11

I'm not in Michigan but typically state adjustments are done of the Federal 1099-R input worksheet. Under state code click for Help and link to all state's codes.

T

TaxLegacyAuthor

Level 2

It is new for 2023, and there is no worksheet to input information regarding the pension subtraction.

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Glossy847

Level 4

In NYS, pensions exempt from state taxes I put code G in the box for state use codes. Check to see if you can use the same code for Michigan

PATAX

Level 12

If it is new for 2023 then it is possible that the software has not yet been updated to reflect this. In Pennsylvania there is a separate worksheet within the PA module that lets you indicate whether a pension and/or annuity is taxable or not.

M

mappp

Level 5

In the Federal return on the 1099-R Federal worksheet, use line 16-1, state distribution and state use code. Put a "G" in the state use code. In the MI return, Form 4884, Part 4, Section A, will automatically do the calculation for the maximum deduction from any taxable pension.

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dtewsley

Level 3

Sorry, Doesn't work.

D

dtewsley

Level 3

I contacted ProSeries technical support twice and they are dumbfounded. Zero answers to my question even though it was signed into law back in January 2023. Not impressed.

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TaxLegacyAuthor

Level 2

Proseries has not been any help in this matter yet. They have not been able to answer my issue. The state use box code G does nothing and calculates nothing. On form 4884, there is a box to fill in for Michigan police, emt, and fire but it does not calculate or go to another form???

BobKamman

Level 15

Michigan pension exclusions are so convoluted that I don't know how anyone figures them, with or without a computer. Somehow it gets from the Form 4884 to the schedule for subtractions, but maybe you can't use more than one exclusion per taxpayer, or it automatically figures the better exclusion. I don't have any Michigan clients, I just took a look at the MI-1040 instructions and it confirms my opinion about a lot of what goes on with Michigan government.

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mappp

Level 5

My previous post, I think, is correct in how the police/EMT pension deduction should work. Subtraction would be figured in Section A, Form 4884. I suspect that there needs to be a new code for the police subtraction rather than using the "G" for government. That subtraction is figured in Section D on Form 4884. MI is in the process of reverting to the previous method of not taxing a large amount of pension dollars ($120K+ MFJ and $61K single). They are spreading this change out over 4 years. MI does allow more than one kind of subtraction - currently military and railroad pensions are not taxed. And, yes, MI is very convoluted in anything they do with taxes. Their website leaves a lot to be desired.

Intuit has obviously dropped the ball and any MI return with police or EMT pensions will have to be held until Intuit corrects the software.

Does anyone have any info on when the software correction will occur?

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dtewsley

Level 3

PA 4, the Lowering MI Costs Plan, signed into Michigan law on March 7, 2023.

PA 4 takes effect on February 13, 2024. However, as it relates to the retirement deduction options, once effective, PA 4 applies to tax years beginning in 2023.

Lets hope ProSeries is aware of this and updates the Michigan software.

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hlsharplin

Level 2

The Pension deductions happens on form 4884 part 1 line 6. but doesn't work. they say it comes from a work sheet but can find it. police, fire, EMTs< ems worker are 100% deductable

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mappp

Level 5

Is ProSeries going to fix this problem?

Is ProSeries even working on this problem?

Any information or an update would be appreciated

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dmalek53

Level 2

I think there are two issues with MI pension for police and firefighters. First these pensions are totally tax free regardless of amount but the Forms issues by Michigan do not address this issue even though their website state that Form 4884 is updated. The instructions talk about it but there is no direction as to what line you enter the subtraction. Secondly, due to about software companies believe the form calculation is correct since there is no direction from MI because MI did not change the Form!

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JeffV

Level 2

It seems Proseries tax software has been updated to allow for the exclusion of government pensions under Michigan Public Act 4 of 2023. I marked the pension type as G and I scrolled toward the bottom of Schedule 1 deductions and check-marked the box for "qualified benefits from fire, police, or corrections service" within the Retirement Status Smart Worksheet.

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jkuhn

Level 2

There is now a check box available for this exclusion on page 2 of the Michigan Schedule 1 Retirement Smart Worksheet. I had to search for it, but it works.

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tom789987

Level 2

The schedule 1 has a area of pensions below Line 23 for marking if pension involved when marked the 3.3 is removed completely and makes it accurate

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