Does Michigan Have a State Inheritance Tax?

On February 16, 2023   /   Michigan Taxes  
Does Michigan Have a State Inheritance Tax?

Does Michigan Have a State Inheritance Tax?

Yes, the Inheritance Tax is still in effect, but only for those individuals who inherited from a person who died on or before September 30, 1993.

For heirs of individuals who passed after 1993, inheritances from a Michigan estate that includes only property located in Michigan will not be subject to inheritance tax. But, if the estate includes property located in other states, a beneficiary who inherits the property may be subject to tax in that state.

Although there is technically no longer a Michigan Inheritance Tax, as of 2023 six states still have one: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. If you are the heir of a loved one who is a Michigan resident that passed away while owning property in one of these 6 states, you might still have to pay an inheritance tax on that property based on the state’s laws.

There are also certain situations with respect to “After Discovered Assets” where the Michigan Inheritance Tax may still be a problem. Continue reading to learn more…

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What Does The Michigan Inheritance Tax Consider As An “After Discovered Asset”?

The Michigan Inheritance Tax considers something as an “After Discovered Asset” when an estate has been closed, but a new asset has been found that was not included in the original estate. If this situation applies to you, the Michigan Department of Treasury has instructions on what you should do in this situation.

What Is The Difference Between The Michigan Inheritance Tax And The Estate Tax?

The major difference between the Michigan Inheritance Tax and the Estate Tax is that the Estate Tax is a tax imposed on the estate itself, whereas the Inheritance Tax is a tax on the actual heir of the property.

Does Michigan Have An Estate Tax?

There is no longer a Michigan Inheritance Tax. Additionally, the State of Michigan does not have an Estate Tax either. However, there is a Federal Estate Tax that your estate may be subject to.

What Is The Federal Estate Tax?

The Estate Tax, commonly referred to as the “Death Tax”, is a tax on your right to transfer property at your death. Proper Estate Planning done prior to death can help you reduce both Estate Taxes and Inheritance Taxes if you own property in a state that still has Inheritance Tax.

Does Michigan Have a State Inheritance Tax? – 2023

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Is Michigan Tax Friendly For Retirees?

On February 8, 2023   /   Michigan Taxes  
Is Michigan Tax Friendly For Retirees?

Michigan Retiree Tax Information

Is Michigan Tax Friendly For Retirees? In short, Michigan is a relatively tax-friendly destination for retirees. It does not tax Social Security and it provides a sizable deduction for seniors on other types of retirement income. Sales taxes are somewhat below average, while property taxes are above average. Michigan does not have an estate tax or an inheritance tax.

ATS Advisors is a family owned Michigan small business aimed at helping fellow Michiganders with all of their tax and financial situations. Contact ATS to talk to us!

Is Social Security taxable in Michigan?

Social Security payments are not taxed in Michigan. Any Social Security retirement income that is considered taxable on your federal income tax return can be subtracted from your Adjusted Gross Income (AGI) when filing your state taxes in Michigan.

Are other forms of retirement income taxable in Michigan?

Yes, but seniors can deduct most or all of this income. The deduction applies to income from retirement savings accounts and pensions. It varies depending on the age of the filer.

Taxpayers born before 1946 are eligible for a deduction against private pension income of $54,404 per person ($108,808 for joint filers) for tax year 2022. These taxpayers can also subtract interest, dividends and capital gains up to $12,127 for single filers and $24,254 for joint filers. Public pension income is completely exempt.

Taxpayers born between 1946 and 1952 can claim a deduction against all income of $20,000 ($40,000 for joint filers). For income from a government pension, that figure is $35,000 for single filers and $55,000 for joint filers ($70,000 for joint filers if each filer has such a pension). Taxpayers born after 1952 can claim the same deductions once they turn 67.

So, if you had $60,000 of 401(k) income and you were born in 1949, you would be able to deduct $20,000 of that income. The remaining $40,000 would be taxed at the Michigan flat income tax rate of 4.25%.

How high are property taxes in Michigan?

The average effective property tax rate in Michigan is 1.32%, which is pretty high. That adds up to about $1,320 for every $100,000 in home value. Of course, property taxes are higher in some areas than in others. In Wayne County the average effective rate is 2.16%. In Mackinac County, it is less than half that at 1.06%.

What is the Michigan homestead property tax credit?

The homestead property tax credit is available to homeowners in Michigan who meet certain eligibility requirements for income and property value. Homeowners who are eligible can claim a credit on all property taxes owed.

The credit application is filed with your annual income tax return. To be eligible, you must have household income of $60,600 or less and your home’s taxable value must be no more than $136,600. You also need to have owned or were contracted to pay rent while occupying a Michigan homestead for at least 6 months during the year where property taxes and/or service fees were imposed.

You are not eligible if 100% of your household resources were received from the Michigan Department of Health and Human services.

Another form of property tax relief available to homeowners in Michigan is the principal residence exemption, or PRE. This allows homeowners to exempt their primary residence from up to 18 mills of local school district operating taxes. (A mill is one tenth of a percent, so 18 mills is 1.8%, which applies to taxable value.)

How high are sales taxes in Michigan?

The state sales tax rate in Michigan is 6%, which is slightly above average. But because the state has no local sales taxes, its state and local combined rates are also below average.

What other Michigan taxes should I be concerned about?

If you plan on working during retirement, keep in mind that many Michigan cities collect their own income taxes in addition to the state income tax rate of 4.25%. In general, these city income taxes range from about 1% to 1.5%, but the Detroit city income tax is 2.4%. Those taxes do not apply to any form of retirement income, however.

Michigan does not have an estate tax or inheritance tax.

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Tax Calculator Michigan Married

On January 30, 2023   /   Michigan Taxes  
Tax Calculator Michigan Married

Tax Calculator Michigan Married – 2023

Welcome to ATS Advisors, your trusted Michigan Tax Experts. If you would like to file with us this year, contact us today!

Need to calculate your Michigan taxes? Click the link below!

MICHIGAN TAX CALCULATOR

What You Need To Know About Michigan State Taxes

The state of Michigan requires you to pay taxes if you’re a resident or nonresident that receives income from a Michigan source. The state income tax rate is 4.25%, and the sales tax rate is 6%.

Michigan Income Tax Brackets and Rates

Michigan has a flat tax rate of 4.25% for 2021, meaning everyone pays the same state income tax regardless of their income.

 

Income Tax Deductions for Michigan

Tier 1 Michigan Standard Deduction

Taxpayers born prior to 1946 may be eligible for the Tier 1 Michigan Standard Deduction, which is applicable to retirement and pension benefits of up to $54,404 for single filers and up to $108,808 for taxpayers filing jointly.

Tier 2 Michigan Standard Deduction

Taxpayers born between 1946 and 1952 may be eligible for the Tier 2 Michigan Standard Deduction, which is worth $20,000 for single filers and up to $40,000 for taxpayers filing jointly.

Tier 3 Michigan Standard Deduction

Taxpayers born in 1953 and 1954 may be eligible for the Tier 3 Michigan Standard Deduction, which is worth $20,000 for single filers and up to $40,000 for taxpayers filing jointly.

Michigan 529 Contributions Deduction

Contributions to Michigan Education Savings Program (MSEP), MI 529 Advisor Plan (MAP), and Michigan Achieving a Better Life Experience Program (MiABLE) 529 accounts may be deducted. Deductions for these contributions are capped at $10,000 for single filers and $20,000 for joint filers. For the MESP and MAP accounts, the maximum deduction is $5,000 combined for a single taxpayer and $10,000 combined for couples filing jointly. The same cap applies to MiABLE accounts.

Michigan Education Trust Deduction

You can deduct contributions you made to a Michigan Education Trust (MET) 529 prepaid tuition contract, including charitable contributions to the MET’s Charitable Tuition Program.

Tax Calculator Michigan Married – 2023

Michigan State Income Tax Credits

Home Heating Tax Credit

Michigan residents who meet certain qualifications may request a credit to help cover heating expenses. Partial-year residents are eligible, but students who are being claimed as someone else’s dependent, residents of college or university-operated housing and those living in licensed care facilities are generally not eligible.

The standard credit has a maximum income ceiling of $39,157 and a maximum allowance of $1,371 (unless you qualify for certain exemptions). The alternate credit computation, which uses your heating costs to determine the amount of your credit, has an income ceiling of $27,700.

You must fill out the Home Heating Credit Claim MI-1040CR-7 form to determine your eligibility. The deadline for that submission is Sept. 30, 2022.

Michigan Earned Income Tax Credit (EITC)

If you claim an EITC on your federal tax return, you can claim one on your Michigan income tax return as well. The Michigan EITC is equal to 6% of your federal credit.

The federal EITC income cap ranges from $21,430 to $57,414 depending on how you file and how many children or relative dependents you claim. The maximum federal EITC amount you can claim on your 2021 tax return is $6,728.

For example, if you’re eligible for $3,000 federally, you can claim $180 through the Michigan EITC.

Do I Have to Pay Income Tax in Michigan?

You’re required to file a Michigan tax return if you have income from a Michigan source. This applies whether you are a full-time or part-time resident, or live elsewhere but earn income from a Michigan-based source.

Residency Status

You’re considered a resident if:

  • You reside in Michigan full time
  • You reside in Michigan for part of the year

Michigan residents who earn income in Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin need only pay Michigan income tax on that income.

 

Sales Tax and Sales Tax Rates

Michigan charges a sales tax of 6%. This is a statewide sales tax and Michigan doesn’t have separate rates by city or county.

 

Property Taxes and Property Tax Rates

Property taxes are determined locally.

Capital Gains Taxes

Michigan taxes capital gains at the same rate as other income, 4.25%.

Senior citizens born before 1946 can deduct interest, dividend and capital gains on their state income tax return. For 2021 taxes, the maximum deduction for single filers is $12,127, and the maximum deduction for joint filers is $24,254.

Inheritance and Estate Tax

Michigan doesn’t have an inheritance or estate tax.

Homestead Property Tax Credit

If you own property in Michigan and live in the state at least half the year, you may be eligible for the homestead property tax credit. The credit is available for taxpayers who have total household resources below $60,600.

Total household resources include income, capital gains, and other money you have received. See page 27 of the instructions for the Michigan 1040 form for a full list of what’s included in total household resources.

If the taxable value of your property exceeds $136,600, you’re not eligible to receive the credit.

Rent Credit

Michigan offers a tax credit for rent paid by residents. Twenty-three percent of the amount you paid for rent is considered property tax, and you can claim it on your state tax return. Your total household resources must be $60,600 or below to claim the credit.

An alternate credit is available for senior citizens age 65 and up who pay more than 40% of their total household resources in rent. The maximum credit for senior renters is $1,500.

Tax Calculator Michigan Married – 2023

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Michigan Small Business Taxpayer Exemptions

On January 16, 2023   /   Michigan Taxes  
Michigan Small Business Taxpayer Exemptions
Michigan Small Business Tax Exemptions

Michigan Small Business Tax Exemptions

Is your Michigan business exempt from Taxes? Here is a list of all exemptions. Continue reading to see if you are exempt.

Questions? Contact ATS Advisors of Michigan

Common Michigan Small Business Taxpayer Exemptions:

501(c)(3) and 501(c)(4) Organizations

501(c)(3) and 501(c)(4) organizations must provide proof that they are exempt under these codes by the Internal Revenue Service. In addition to this they must provide a certificate of exemption stating that the property will be used or consumed in carrying out the operations of the organization. Revenue Administrative Bulletin 1995-3 and 2002-15 has more information on this topic.

Churches

Sales to organized churches or houses of religious worship are exempt from sales tax. These exempt sales must not involve property used in commercial enterprises. Vans or buses may be purchased exempt if the manufacturer’s rated seating capacity is 10 or more and it is used primarily for transportation of persons for religious purposes. Churches may not purchase any other type of vehicle exempt. Anyone who is directly engaged in the business of constructing, altering, repairing, or improving real estate for a church or a house of religious worship is liable for the sales tax on the inventory value of the materials affixed to the property, even if the church purchases the materials. Revenue Administrative Bulletin 1995-3 and 2002-15 has more information on this topic.

Government

Sales to the United States government, the State of Michigan and its political subdivisions, departments and institutions are not subject to tax, if the sales are ordered on the government form or purchase order and are paid for directly to the seller by warrant on government funds. Sales to the American Red Cross, and its chapters and branches are exempt. All sales to other states or countries are subject to Michigan sales tax. Sales to employees of the government for their own use are subject to tax. The exemption certificate is 3372 Michigan Sales and Use Tax Certificate of Exemption.

Hospitals

Sales to hospitals are exempt from sales tax when the organization is not operated for profit. The income or benefit from the operation must not inure to any individual or private shareholder, directly or indirectly. Revenue Administrative Bulletin 1995-3 and 2002-15 has more information on this topic.

Industrial Processors

An industrial processing exemption is allowed for property which is used or consumed in transforming, altering, or modifying tangible personal property by changing the form, composition, or character of the property for ultimate sale at retail or for sale to another processor for further processing and ultimate sale at retail. The industrial processing exemption does not include property which is or becomes affixed to real estate, office supplies, administrative office equipment, or vehicles licensed for public highway use, except when the vehicle is used to mix and agitate materials added at the plant or job site in the concrete manufacturing process. Industrial processing also does not include the receipt or storage of raw materials extracted by the user or consumer or the preparation of food or beverages by a retailer for retail sale. The exemption certificate is 3372 Michigan Sales and Use Tax Certificate of Exemption .

Retailers

Retailers purchasing for resale should provide a signed exemption certificate by completing form 3372 Michigan Sales and Use Tax Certificate of Exemption and check box 1. For Resale at Retail in Section 3, Basis for Exemption Claim. Their sales tax license number must be included in the blank provided on the exemption claim. However, a seller should not accept the sales tax license number alone as a claim of exemption. The department does not issue tax-exempt numbers.

Schools

Sales to schools and parent cooperative preschools are exempt from sales tax when the organization is not operated for profit. The income or benefit from the operation must not inure to any individual or private shareholder, directly or indirectly. PTA, PTO, and all other groups and organizations must qualify separately for exemption when making purchases for their organizations. Sales to teachers are subject to tax. Revenue Administrative Bulletin 1995-3 and 2002-15 has more information on this topic.

Wholesalers

Wholesalers purchasing for resale should provide the seller with a completed form 3372 Michigan Sales and Use Tax Certificate of Exemption and check the box for Resale at Wholesale. Sales tax licenses are not issued to wholesalers.
-Michigan Small Business Taxpayer Exemptions-

Additional Exemptions and Deductions

Exemption Notices

Notice to Taxpayers Regarding Sales and Use Tax Exemptions for Feminine Hygiene Products

Sales and Use tax exemption for Transformational Brownfield Plans

Notice Regarding Data Center Exemption

Third-Party Lenders – Bad Debt Deductions

Effective October 1, 2009, a bad debt deduction may be claimed by a third-party lender or a retailer, provided that the retailer who reported the tax and the third-party lender financing the sale execute and maintain a written election designating which party is entitled to claim the deduction. There is no Treasury form to make this election.  However, the election must be written, must be signed by both parties, and must clearly and unequivocally state which party is entitled to the deduction; the mere assignment of the right to the debt alone does not satisfy the written election requirement.  The election must be executed before the bad debt is incurred.

The written election must be retained by the parties and made available to the Department upon request or audit.  In addition to the written election, the following conditions must also be met:

  • No deduction or refund was previously claimed or allowed on any portion of the account receivable.
  • The account receivable has been found worthless and written off by the seller that made the sale or by the lender on or after September 30, 2009.
  • The bad debt is eligible to be claimed, in accordance with the taxpayer’s accounting method, as a deduction under Section 166 of the Internal Revenue Code, 26 USC 166, or would be recognized as a bad debt if the claimant were a corporation.

A party making a refund claim must provide the written election to the Department with its refund request. A request for a refund based on bad debt incurred from the sale of motor vehicle must include a copy of the RD-108 for that vehicle.

For purposes of this deduction, “lender” includes any of the following:

  • A person that holds or held an account receivable that was purchased directly from the taxpayer that reported the tax.
  • Any person that holds or held an account receivable pursuant to that person’s contract directly with the taxpayer that reported the tax.
  • The issuer of a private label credit card that may only be used to make purchases from the vendor whose name or logo appears on the card or instrument.

The following amounts shall not be included as bad debt:

  • Interest or finance charges.
  • Sales or use tax charged or collected on the original sale.
  • Uncollectible amounts on property that remains in possession of the seller until the full purchase price is paid, e.g., property placed on layaway.
  • Expenses incurred in attempting to collect any account receivable or any portion of an account that is subsequently recovered.
  • Sales tax charged on property that is subsequently repossessed.
  • Any debt or account receivable that was sold, assigned, or transferred to, and remains in the possession of, a third party for collection.
  • A sale where the tax was remitted to the Department after the expiration of the applicable statute of limitations.

Source MCL 205.54i; MCL 205.99.

Interstate (Fleet) Motor Carriers Exemption

Michigan provides a sales and use tax exemption to interstate (fleet) motor carriers for rolling stock and parts affixed to rolling stock that are purchased, rented or leased by an interstate (fleet) motor carrier and used in interstate commerce. The exemption is for the purchase or use of qualified trucks and trailers (and parts affixed to them) that are purchased, leased, or rented after April 30, 1999. For additional information please refer to Internal Policy Directive 2003-1 and Internal Policy Directive 2010-1.

Interstate (fleet) motor carriers who qualify for exemption may claim exemption from sales or use tax by providing the seller or lessor with the prescribed Michigan Sales and Use Tax Certificate of Exemption, form 3372. The buyer or lessee would check the box “Rolling Stock purchased by an Interstate Motor Carrier”.

Use Tax Exemption on Vehicle Title Transfers

Michigan grants an exemption from use tax when the buyer and seller have a qualifying family relationship.

Read the brochure for details

– Michigan Small Business Taxpayer Exemptions –

Common Questions and Answers:

Can a customer instruct a seller not to charge sales or use tax because they will pay it directly to Michigan?

Yes, if the customer is authorized by Treasury and has a “direct pay permit” that covers the property purchased or leased.  The customer must provide to the seller a completed Form 3372, Michigan Sales and Use Tax Certificate of Exemption, or the required information in another acceptable format.  See Revenue Administrative Bulletin (RAB) 2016-14.  When stating its basis for claiming an exemption, the customer should state, “Authorized to pay sales or use taxes on purchases of tangible personal property directly to the State of Michigan” and must include its account number.

Does Michigan issue tax exempt numbers? If not, how do I claim an exemption from sales or use tax?

The Michigan Department of Treasury does not issue tax exempt numbers. In order to claim an exemption from sales or use tax, a purchaser must provide a valid claim of exemption to the vendor by completing one of the following:

  • Michigan Sales and Use Tax Certificate of Exemption (Form 3372)
  • Multistate Tax Commission’s Uniform Sales and Use Tax Certificate
  • Streamlined Sales and Use Tax Agreement Certificate or the same information in another format.

Note: A seller should not solely accept an FEIN as evidence of exemption from sales and use taxes.

How do I claim a valid exemption with my supplier?

To claim exemption, a purchaser must provide the supplier with one of the following:

  • Michigan Sales and Use Tax Certificate of Exemption (Form 3372)
  • Multistate Tax Commission’s Uniform Sales and Use Tax Certificate
  • Streamlined Sales and Use Tax Agreement Certificate or the same information in another format

Is manufacturing equipment tax exempt?

Michigan provides an exemption from sales or use tax on machinery or equipment used in industrial processing and in their repair and maintenance. The exemption does not include tangible personal property affixed to and becoming a structural part of real estate.

For further information on exemptions refer to Revenue Administrative Bulletin 2000-4.

Are purchases made for agricultural production tax exempt?

Michigan provides an exemption from sales or use tax on tangible personal property used in tilling, planting, caring for or harvesting things of the soil, in the breeding, raising or caring of livestock poultry or horticultural products for further growth. The exemption does not include tangible personal property affixed to and becoming a structural part of real estate.

For further information on exemptions refer to Qualified Agricultural Property Exemption Guidelines.

Is my purchase of a truck or trailer considered “rolling stock” and exempt from tax?

NOTE: Your first tractor/trailer lease/purchase IS NOT EXEMPT from Michigan sales or use tax.

In order to be exempt from Michigan sales or use tax certain criteria must be met. Exemption is allowed in Michigan on the sale of rolling stock purchased by an interstate motor carrier or for the rental or lease of rolling stock to an interstate motor carrier and used in interstate commerce.

According to MCL 205.54r,

  • Rolling stock means a qualified truck, a trailer designed to be drawn behind a qualified truck, and parts affixed to either a qualified truck or a trailer designed to be drawn behind a qualified truck.
  • Interstate motor carrier means a person engaged in the business of carrying persons or property, other than themselves, their employees, or their own property, for hire across state lines, whose fleet mileage was driven at least 10% outside of this state in the immediately preceding tax year.
  • Qualified truck means a commercial motor vehicle power unit that has 2 axles and a gross vehicle weight rating in excess of 10,000 pounds or a commercial motor vehicle power unit that has 3 or more axles.

Motor carriers who qualify may claim exemption from sales or use tax by providing the seller or lessor with the prescribed Form 3372, Michigan Sales and Use Tax Certificate of Exemption. The buyer or lessee would check the box “Rolling Stock purchased by an Interstate Motor Carrier”.

Is a vehicle purchased by a church tax exempt?

ONLY vans or buses may be purchased exempt if the manufacturer’s rated seating capacity is 10 or more and it is used primarily for transportation of persons for religious purposes.

I am a 501(c)(3)/501(c)(4) Organization, how do I claim exemption from Michigan Sales and Use Tax?

Organizations exempted by statute, organizations granted exemption from federal income tax under Internal Revenue Code Section 501(c)(3) or 501(c)(4), or organizations that had received an exemption letter from the Michigan Department of Treasury prior to June 1994 are entitled to sales and use tax exemption in the State of Michigan.

Please refer to Revenue Administrative Bulletin (RAB) 1995-3 for more information on the exemption from Michigan sales and use tax as it relates to nonprofit entities.

In order to claim exemption, the nonprofit organization must provide the seller with both:

  • A completed Form 3372, Michigan Sales and Use Tax Certificate of Exemption
  • Evidence of nonprofit eligibility:
    • Either the letter issued by the Department of Treasury (prior to June 1994),or
    • Your federal determination as a 501(c)(3) or 501(c)(4) organization.

How do I obtain a tax exempt number to claim an exemption from Sales or Use Tax?

The Michigan Department of Treasury does not issue “tax exempt numbers”.

Form 3372, Michigan Sales and Use Tax Certificate of Exemption, is used to claim exemption from Michigan Sales and Use Tax.  The buyer must present the seller with a completed form at the time of purchase.  For more information on exemption requirements and the procedures to claim an exemption see Revenue Administrative Bulletin 2002-15.

A customer is providing me with their tax exempt number as proof that they do not have to pay sales tax on their purchase; is this correct/valid?

The Department of Treasury does not issue or accept tax exempt numbers. Sellers should not accept a tax exempt number as evidence of exemption from sales and use tax.

To claim exemption for purchases, the buyer must present the seller with a completed Form 3372, Michigan Sales and Use Tax Certificate of Exemption. The seller will retain the certificate in their records.

I am a retailer, how do I claim a resale exemption with my supplier?

To claim exemption, a retailer must provide the supplier with a completed Form 3372, Michigan Sales and Use Tax Certificate of Exemption, indicating that the purchase is for “Resale at Retail”. Their sales tax license number must be included in the space provided.

NOTE:  A seller should not accept a FEIN as evidence of exemption from sales and use taxes without Form 3372.

Michigan Small Business Taxpayer Exemptions
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Step by Step Michigan Unemployment Tax Form 2022

On January 1, 2023   /   Michigan Taxes  
Step by Step Michigan Unemployment Tax Form 2022

LEO Dec.2022 – Michigan Unemployment Tax Form 2022

Claimants have until Jan. 2 2023, to select electronic delivery option

As tax season approaches, the Michigan Unemployment Insurance Agency (UIA) reminds those who were paid jobless benefits this year to choose one of two options for getting a copy of their 1099-G tax form. You can receive an electronic copy accessible online or a paper copy sent by mail to the address on file with UIA.

Unemployment benefits are taxable, so payments received in 2022 must be reported on state and federal tax returns. Anyone who received jobless benefits this year will receive Form 1099-G Certain Government Payments as proof of income and how much income tax was withheld this year.

Claimants have until Jan. 2, 2023, to request to that an electronic version of their 1099-G be posted to their Michigan Web Account Manager (MiWAM) account. To change your preference:

  • Log into your MiWAM account at MiLogin.Michigan.gov.
  • Under the Account Alerts tab, click on “Request a delivery preference for Form 1099-G.”
  • If your Account Alerts tab doesn’t have a 1099-G link, click on the Claimant Services tab; then select “Delivery Preference for Form 1099-G.”

Statements will be available to view or download by the end of January 2023. Here’s how to access it online:

  • Go to the “I Want To” heading in MiWAM.
  • Click on the “1099-G” link.
  • Click on the 1099-G letter for the 2022 tax year.

Those who do not request an electronic 1099-G form will have a paper copy sent to them at the end of January through the U.S. postal mail to the address listed on their MiWAM account. If you moved in the past year, be sure to update your mailing address in MiWAM to receive your tax form at the correct address.

UIA’s Your 1099-G Tax Form webpage answers key questions claimants may have.

If the 1099-G that you receive lists an incorrect amount in “total payment” or “tax withheld,” you can request a revised form by downloading and completing Form UIA 1920, Request to Correct Form 1099-G. Then, mail the form to:

Unemployment Insurance Agency, 1099-G

P.O. Box 169

Grand Rapids, MI 49501-0169.

Or Fax it to 1-517-636-0427.

Timely access to tax forms is a tenet of UIA Director Julia Dale’s wide-ranging reform of the agency, including providing exemplary customer service, fighting fraud, and instilling a human-centered approach to interactions with workers and employers. Since Dale was named director in October 2021, she has:

  • Announced a replacement for the agency’s decade-old computer system with a user-friendly, state-of-the-art interface for claimants and businesses. A new system will allow for quick analysis of data that is currently not possible and timely program adjustments as economic conditions change.
  • Approved more than 76,000 overpayment waivers this year of state and federal benefits paid out during the pandemic to Michigan workers and totaling more than $555 million.
  • Obtained two federal approvals for a pause on certain collections for those facing overpayments.
  • Secured a $6.8 million equity grant from the U.S. Department of Labor (DOL) to make it easier for workers in underserved communities to access jobless benefits.
  • Reassigned staff and resources to address the largest categories of claims that are contributing to the agency’s case backlog.
  • Implemented new ethics and security clearance policies for employees and contractors.
  • Redesigned the agency’s public website at Michigan.gov/UIA for easier use on mobile phones and tablets.
  • Rebuilt to nearly $1.8 billion (and growing) the UI Trust Fund from which weekly benefits are paid to workers who lose their job through no fault of their own.
  • Worked to simplify its correspondence using a human-centered approach to make letters easier to understand for claimants and employers.

Questions? Contact ATS Advisors

Contact ATS

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3 Things To Know About Michigan Estate Tax

On December 6, 2022   /   Michigan Taxes  
3 Things To Know About Michigan Estate Tax

Is There a Michigan Estate Tax?

There is no estate tax in Michigan. Michigan is one of 38 states that have no estate tax. No matter the size of your estate, you won’t owe money to the Wolverine State. You might owe taxes to the federal government through the federal estate tax, depending on the size of your estate.

Even though there is no Michigan estate tax, you might still owe the federal estate tax. The exemption for that tax is $11.70 million in 2021 and $12.06 million in 2022. This tax is portable for married couples, meaning that with the right legal moves a married couple can protect up to $24.12 million when both spouses have died.

What Is The Estate Tax?

The estate tax is applied to the estate of a recently deceased person after they die but before the money is passed on to their heirs. It is sometimes referred to as the “death tax.”

The estate tax is not to be confused with the inheritance tax. That tax is applied to a person’s heirs after they have already received their inheritance.

Does Michigan Have an Inheritance Tax and Gift Tax?

Like the majority of states, Michigan does not have an inheritance tax. If you stand to inherit money in Michigan, you should still make sure to check the laws in the state where the person you are inheriting from lives. In Pennsylvania, for example, the inheritance tax can apply to heirs who live out of state if the descendant lives in the state.

Michigan also has no gift tax. The federal gift tax exemption is $15,000 per recipient per year in 2021 and $16,000 in 2022

 

TIPS:

  • Estate planning, in Michigan or elsewhere, takes time and knowledge. If you need some help, you should consider reaching out to ATS Advisors. We are professionals in this matter and are here to help!
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Plymouth Township Summer Taxes & Winter Taxes

On November 22, 2022   /   Michigan Taxes  
Plymouth Township Summer Taxes & Winter Taxes

Plymouth Township Summer Taxes & Winter Taxes

Any Questions? Contact ATS Advisors Plymouth

Your summer tax bill includes the tax levies for:

  • City of Plymouth
  • Plymouth-Canton Schools
  • State Education Tax (SET)
  • Wayne County Regional Educational Service Agency(RESA)
  • Enhanced Wayne County Regional Educational Service Agency (ENH RESA)
  • Schoolcraft College
  • Wayne County Operating

Summer tax bills are due August 10 annually.

Summer Tax Bills are payable through August 10 without penalty. They may be paid at the City Hall counter, placed in the drop box next to the book return at the library,  or deposited in the drop box in the City Hall lobby if the counter is closed.

 

Winter Taxes

Your winter tax bill includes the tax levies for:

  • Wayne County Voted Millage
  • Wayne County Jail
  • Wayne County Parks
  • Plymouth District Library
  • Huron Clinton Metro Authority
  • Detroit Regional Zoo
  • Detroit Institute of Arts Museum

Winter tax bills are due February 28 each year.

Winter Tax Bills are payable through February 28 without penalty. They may be paid at the City Hall counter, placed in the drop box next to the book return at the library,  or deposited in the drop box in the City Hall lobby if the counter is closed. All tax payments placed in the drop boxes by December 31 will be receipted as paid in the current year.

Additional information is provided on the back of your bill. Please review your tax bill to check the correctness of the information appearing on it. If you receive a bill in error, please return the tax bill to the City Treasurer’s Office. If you are the owner or agent of the property but the name or address information is incorrect, please correct it on the bill and mail it back with your payment. If you need additional information, please call the City Treasurer’s Office at 734- 453-1234, during regular business hours.

Here are the current millage rates.

In addition to paying your tax bill in person on via mail, there are several other options.

Online Payments

You can  pay your taxes online via a credit/debit card through the online property information site. There is a convenience fee associated with using this service.

Direct Payment
You may request that your payment be made automatically by completing Direct Payment Enrollment form.


Special Payment Deferments

The State of Michigan has a program that allows certain property owners to defer their tax payments.  Information on this program is available on the state’s website. The Step Forward Michigan program also provides property tax assistance.

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Michigan Student Loan Forgiveness

On October 6, 2022   /   Michigan Taxes, Uncategorized  

Gov. Whitmer Announces Tax-Free Public Service Loan Forgiveness

Michiganders do not have to pay state or federal taxes on federal loan forgiveness; approximately 1.4 million Michiganders have student loans

LANSING, Mich. – Today, Governor Gretchen Whitmer announced that student loan relief would not be treated as taxable income in Michigan. Approximately 1.4 million Michiganders eligible for relief will not owe any state taxes for receiving benefits of the Public Service Loan Forgiveness (PSLF) program or other student loan forgiveness. Today’s announcement builds on Governor Whitmer’s actions to make higher education more affordable for Michiganders in every corner of the state. Michigan Student Loan Forgiveness.

“Tax-free student loan forgiveness could benefit up to 1.4 million Michiganders and help keep money in their pockets,” said Governor Gretchen Whitmer. “Michigan PSLF recipients who serve their community will not be taxed for any amount of student loan relief they have received. In Michigan, we value the hard work that all our citizens put in to get the education they need. I will work with anyone to keep lowering the cost of higher education and help students not go into debt in the first place.”

“Our work to open pathways of opportunity for more Michiganders is critical to growing our economy, creating jobs, and building prosperity,” said Lt. Governor Garlin Gilchrist II. “Exempting student loan relief from taxable income builds on the work we have done to boost postsecondary education and skills training in Michigan. Governor Whitmer and I are committed to continuing this work and helping Michiganders access affordable education.”

“I was born in a western Kentucky coal town, daughter of Detroit auto factory workers. It was against the odds that I got my GED, and somehow clawed my way into the Honors College at Western Michigan University. I worked hard, held down a student job, became a Presidential Scholar, and got funding for a fellowship in grad school. Regardless of full fellowship funding, I still needed loans to survive, despite working three jobs during that time. My parents had no way of helping me,” said Melissa Milton-Pung, a project manager at the Michigan Municipal League and PSLF participant. “As the first person in my family to get a bachelor’s degree, then a master’s degree, the decision to go into public service was made easier by the promise of loan relief. It took 17 years for that forgiveness: 10 years of working to qualify, then 7 more years waiting for the program to finally work. I believe in this mission-oriented life and plan to continue to do good work in public service.”

Tax-Free Student Debt Relief

Typically, when debt is forgiven, the IRS treats it as taxable income. However, provisions of the American Rescue Plan have temporarily lifted this requirement. Any federal loans that are discharged between 2021 and 2025 will not be considered taxable income by the federal government. Because state tax law aligns with federal law, this temporary relief will be in effect in Michigan through 2025 as well.

Governor Whitmer’s Bipartisan Investments in Tuition-Free Certificates and Degrees 

Since taking office, Governor Whitmer has worked across the aisle to make college more affordable by expanding access to tuition-free certificates and degrees for Michiganders 25 and over and future educators, as well as scholarships for students pursuing degrees at public Michigan universities.  She established the bipartisan Michigan Reconnect program, which has put over 100,000 people on the path to tuition-free higher education or skills training. Governor Whitmer’s recent bipartisan education budget created the Mi Future Educator Fellowship, which provides $10,000 scholarships for 2,500 future Michigan educators. The budget also funded Grow Your Own Programs, helping districts train school staff for classroom positions, tuition-free.

Public Service Loan Forgiveness Program Background

If you work in public service, including the military, qualifying non-profits, or federal, state, local, or tribal governments, you may qualify for PSLF. After 10 years of public service employment and 120 on-time loan payments, you may be eligible to have your entire student loan balance forgiven.

As of July 2022, 7,000 Michiganders have had $406 million in loans forgiven under the PSLF. Over 147,000 more Michiganders may be eligible due to the recent PSLF waiver.

New temporary changes to the PSLF program make it easier than ever to have your debt forgiven. Some changes include allowing borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF. However, these temporary changes end on October 31, 2022. Public servants should apply at: studentaid.gov/pslf/.

Until October 31, 2022, the U.S. Department of Education is offering public servants working in government and eligible non-profits a second chance to qualify for student loan forgiveness. An estimated 154,000 public service workers in Michigan could be eligible for student loan debt relief under the PSLF waiver. According to the Office of Federal Student Aid’s June report, over 6,000 Michiganders have taken advantage of the PSLF waiver and have had $358 million in loans forgiven.

The recent changes to the federal PSLF program allow previously ineligible borrowers – those with a non-Direct loan, who are not enrolled in an income driven repayment plan, who have missed a repayment, or made a partial repayment in the past – to receive credit toward loan forgiveness for the years they worked in government or a qualifying non-profit.

To apply for the PSLF waiver, borrowers should:

If borrowers have questions regarding their individual situation regarding Michigan Student Loan Forgiveness, they can visit or call FedLoan Servicing at 1-855-265-4038.

Congress created PSLF to recruit and retain top talent in the public sector workforce. If an individual works for federal, state, local, or tribal government or a qualifying non-profit for 10 years, makes 120 full, on-time loan payments, and submits all required paperwork, the federal government forgives all of their remaining student loan debt.

Though PSLF was established in 2007, it has faced implementation challenges. Prior to the PSLF Waiver, only 2.1% of eligible borrowers had been approved for loan forgiveness. The recent PSLF program overhaul is the U.S. Department of Education’s attempt to deliver on the program’s promise and thank the public service workforce for their dedication and support.

The PSLF: Champions Toolkit is available for employers and professional associations to help them amplify the PSLF waiver opportunity and connect borrowers to resources. The toolkit includes sample email correspondence and social media posts. It is available for download here.

 

Questions regarding Michigan Student Loan Forgiveness? Contact Us 

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25 Michigan Small Business Tax Write-Offs

On September 19, 2022   /   Michigan Taxes  

Here are 25 Michigan Small Business Tax Write-Offs that you can use to save money this upcoming tax season. These top tax write-offs will help speed up the income tax filing process and reduce the amount you owe to the government in taxes.

Questions? Contact ATS Advisors today!

1. Business Meals

As a small business, you can deduct 50 percent of food and drink purchases that qualify. To qualify, the meal needs to be related to your business and you need to keep the following documentation related to the meal:

  • Date and location of the meal
  • Business relationship of the person or people you dined with
  • The total cost of the meal

The easiest way to track business meal expenses is to keep your receipt and jot down notes on the back about the details of the meal.

2. Work-Related Travel Expenses

All expenses related to business travel can be written off at tax time, including airfare, hotels, rental car expenses, tips, dry cleaning, meals and more. You can reference the IRS website for a full list of deductible business travel expenses. To qualify as work-related travel, your trip must meet the following conditions:

  • The trip must be necessary to your business.
  • The trip must take you away from your tax home, i.e. the city or area in which your company conducts its business.
  • You must be travelling away from your tax home for longer than a normal work day and it must require you to sleep or rest on route.

3. Work-Related Car Use

If you use your car strictly for work-related purposes, you can write off all costs associated with operating and maintaining it. If your car use is mixed between business and personal reasons, you can only deduct costs that are related to the business usage of the vehicle. You can claim the mileage you use for business driving, either by deducting the actual miles traveled for business, or by using the standard mileage deduction of $0.56 per mile driven.

4. Business Insurance

You can deduct the cost of your business insurance on your tax return. If you have a home office, or use a portion of your home to run your business, you can deduct your renter’s insurance costs as part of your home office write-offs.

5. Home Office Expenses

Under new simplified IRS guidelines for home office expenses, home-based small businesses and freelancers can deduct five dollars per square foot of your home that’s used for business purposes, up to a maximum of 300 square feet. To qualify as a tax deduction, your work area has to be used exclusively for business (i.e. you can’t write off the square footage of your dining room if you do your work at the table during the day) and you need to use the home office regularly as your principal place for conducting business.

6. Office Supplies

You can write off office supplies including printers, paper, pens, computers and work-related software, as long as you use them for business purposes within the year in which they were purchased. You can also deduct work-related postage and shipping costs. Be sure to file all receipts for office supply purchases, for documentation.

7. Phone and Internet Expenses

If using the phone and internet is vital to running your business, you can deduct these expenses. If, however, you use the phone and internet for a mix of work and personal reasons, you can only write off the percentage of their cost that goes toward your business use. For example, if roughly half of your internet usage is business related, you can write off 50% of your internet expenses for the year.

8. Business Interest and Bank Fees

If you borrow money to fund your business activities, the bank will charge you interest on the loan. Come tax season, you can deduct the interest charged both on business loans and business credit cards. You can also write off any fees and additional charges on your business bank account and credit card, such as monthly service fees and any annual credit card fees.

9. Depreciation

When you deduct depreciation, you’re writing off the cost of a big-ticket item like a car or machinery over the useful lifetime of that item, rather than deducting it all in one go for a single tax year. Businesses usually deduct depreciation for long-term business investments that are more costly, so they’re reimbursed for the expense over the entire useful lifetime of the item. Here’s how to calculate depreciation:

Depreciation = Total cost of the asset / Useful lifetime of the asset

10. Professional Service Fees

Any professional service fees that are necessary to the functioning of your business, such as legal, accounting and bookkeeping services, are deductible for tax purposes. If you use accounting or bookkeeping software for your business, that would also qualify as a tax deduction. If you are having trouble determining whether a particular professional service expense is for work or personal use, these guidelines for legal and professional fees from the IRS can help you judge the nature of the expense.

11. Salaries and Benefits

If you’re a small business owner with employees, you can write off their salaries, benefits and even vacation pay on your tax returns. There are a few requirements for writing off salary and benefit expenses:

  • The employee is not a sole proprietor, partner or LLC member in the business
  • The salary is reasonable and necessary
  • The services delegated to the employee were provided

12. Charitable Contributions

You can deduct charitable donations that you make to qualifying organizations. If your business is set up as a sole proprietorship, LLC or partnership, you can claim these expenses on your personal tax forms. If your company is a corporation, you claim charitable donations on your corporate tax return.

13. Education

Any educational expenses you incur to bring value to your business are fully deductible for tax purposes. The requirements for education-related expenses are that the course or workshop must improve your skills or help maintain your professional expertise. Educational expenses that qualify for deductions include:

  • Courses and classes related to your field of work
  • Seminars and webinars
  • Trade publication subscriptions
  • Books related to your industry

14. Child and Dependent Care

Costs you incur for caring for children or adult dependents is tax deductible. If your own children are twelve years old or younger, you can write off costs associated with their care. Adult dependents also qualify for deductions, including spouses and some other related adults who are unable to care for themselves because of physical or mental disability.

15. Energy Efficiency Expenses

Upgrades that you make to your home to ensure it’s more energy efficient can qualify for tax credits. You can claim 30 percent of the cost of alternative energy equipment for your home, including solar panels, solar water heaters and wind turbines. The IRS site offers further details on the home energy tax credits.

16. Investments

If you borrow money in order to make investments, you can write off the interest paid on the loan. You can deduct the interest up to the point that it matches what you earned in investment income.

17. Foreign-Earned Income Exclusion

American citizens with businesses based abroad can, under certain circumstances, leave the foreign income they’ve earned off their tax return. To qualify for the exclusion, your tax home must be based abroad. This article can help you better understand the requirements for foreign-earned income exclusion.

18. Medical Expenses

You can claim both insurance premiums and medical care expenses, including doctor’s fees, prescription drugs and home care. If you’re self-employed and pay for your own health insurance then you can deduct your health and dental care insurance premiums.

19. Real Estate Taxes

Real estate taxes paid at the state and local levels can be deducted on your income taxes. Property taxes are included in these deductions and you can claim up to a total of $10,000.

20. Mortgage Interest

You can deduct interest payments made toward mortgage loans to buy, construct or improve your home if you use your home for business purposes. If you take out loans against your home equity, you can also deduct the interest on those loans.

21. Moving Expenses

If you move and the main reason for doing so is work related, you might be able to fully deduct the costs associated with the move. To qualify, your move has to pass the distance test. To pass the distance test your new job location has to be at least 50 miles farther from your former home than your old job location was from your previous home.

22. Retirement Contributions

If you contribute to an Individual Retirement Account, doing so helps reduce your taxable income for the year. Your total IRA contributions can’t exceed the total income you earned that year or it can’t exceed the annual maximum contribution, whichever one is less.

23. Advertising and Promotion

You can fully deduct expenses related to promoting your business, including digital and print advertising, website design and maintenance and the cost of printing business cards.

24. Client and Employee Entertainment

If you take business clients out, you can deduct the expense as long as you discuss business during the meeting and the entertainment takes place in a business setting for business purposes. You can deduct 50 percent of the cost of these entertainment expenses. You can also deduct as much as 100 percent of the cost of social events held for your employees.

25. Startup Expenses

If you launched a new business venture in the latest tax year, you can deduct as much as $5,000 in startup expenses you incurred in the lead up to your business launch. That can include costs associated with marketing your new business, travel and training costs.

How Do Business Tax Deductions Work?

Business tax deductions work by lowering your taxable income, thereby lowering the amount of tax you owe to the government as part of your tax return. To find out how to claim the most deductions possible, it’s a good idea to consult a professional, like a CPA. It’s the job of an accountant to know what tax deductions are available and how they can apply to your small business.

What Can Be Written off as Business Expenses?

Small businesses, freelancers and entrepreneurs can write off a range of business expenses when filing their income tax, including:

  • Car expenses and mileage
  • Office expenses, including rent, utilities, etc.
  • Office supplies, including computers, software, etc.
  • Health insurance premiums
  • Business phone bills
  • Continuing education courses
  • Parking for business-related trips
  • Business-related travel expenses, including flights, rental cars, hotels, etc.
  • Postage

What Is a 100 Percent Tax Deduction?

A 100 percent tax deduction is a business expense of which you can claim 100 percent on your income taxes. For small businesses, some of the expenses that are 100 percent deductible include the following:

  • Furniture purchased entirely for office use is 100 percent deductible in the year of purchase.
  • Office equipment, such as computers, printers and scanners are 100 percent deductible.
  • Business travel and its associated costs, like car rentals, hotels, etc. is 100 percent deductible.
  • Gifts to clients and employees are 100 percent deductible, up to $25 per person per year.
  • If you’re self-employed and pay your own health premiums, you can deduct those at 100 percent.
  • Your annual business phone bills are 100% deductible.

What Is a 1099?

A 1099 is an IRS tax form that’s used to report any income earned through sources other than employment, so independent contractors, freelancers and self-employed workers use the 1099 form. You can find out more about the 1099 tax form on the IRS site.

Can You Write off Previous Years’ Taxes?

As a small business, you may be able to write off the state and local taxes in the year you paid them, even if the taxes are from a previous year. However, you can’t deduct any federal taxes that you paid for a prior year.

 

Thank you for taking time to read our 25 Michigan Small Business Tax Write-Offs guide!

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Michigan Home Heating Tax Credit

On September 5, 2022   /   Michigan Taxes  

Michigan residents can apply for the Michigan Home Heating Tax Credit until Sept. 30

Tax credits are not just for tax season. The Community Economic Development Association of Michigan (CEDAM) is encouraging low- to moderate-income residents across the state to apply for the Home Heating Credit before the deadline of Sept. 30.

Each year, the Home Heating Credit is available to Michigan residents. This year there is $120 million allocated to provide qualified homeowners and renters in Michigan with heating assistance through the Home Heating Credit. This amount is significantly higher than previous years due to an additional $70 million in funding from the federal American Rescue Plan Act.

“The Michigan Department of Health and Human Services (MDHHS) wants to increase access to and usage of the Home Heating Credit program,” said MDHHS Director Elizabeth Hertel. “We are working with CEDAM to help get the word out to residents who need help keeping their heat turned on ahead of the fall and winter months.”

CEDAM was awarded a $1 million grant earlier this year to increase access to the Home Heating Credit benefit and free tax preparation services, and, in partnership with the Michigan Department of Health and Human Services, they are encouraging Michigan homeowners and renters to apply.

“Every family should be able to keep the heat on and stay warm and safe through our Michigan winters,” said Governor Gretchen Whitmer. “I am proud of the work we have done to fund and expand the Home Heating Tax Credit, and I urge families to apply by September 30 so they can be ready for the fall and winter. This credit goes directly to qualified homeowners and renters in Michigan, lowering their costs and saving them money to pay other bills and put food on the table. I will work with anyone to offer families real relief, and I am grateful to the Community Economic Development Association of Michigan for their work in getting this done.”

Last year, the average household received $216 from the Home Heating Credit benefit to reduce their residential heating costs. Additionally, recipients of food assistance benefits that have received a Home Heating Credit of greater than $20, may be eligible for an increase in their benefits.

“Eligible individuals should not wait to apply for the Home Heating Credit with the September 30 deadline approaching,” said State Treasurer Rachael Eubanks. “This important tax credit can provide some relief as we enter into the fall heating season, leaving more money available for other critical needs.”

In order to qualify, residents must be a homeowner, or a renter with a contracted lease and meet income requirements. The best way to apply for the Home Heating Credit, and a number of other tax credits available to Michigan residents, is to book an appointment at a local free tax preparation site.

“There are over 70 locations across Michigan where residents can go to meet with trained, expert tax professionals at no cost,” said Matt Hetherwick, director of individual tax programs at Accounting Aid Society. “Everyone should file a tax return, even if they are not required to, because tax credits and benefits are waiting to be claimed.”

Free tax preparation is a community service designed to help Michigan residents improve their financial wellbeing. Residents who qualify for free tax preparation include those with disabilities, those with limited English-speaking ability and those who earn less than $58,000 per year. Tax preparation providers are trained volunteers who are experts in taxes and have an accuracy rate, on average, higher than their for-profit colleagues.

If you are looking to talk with an experienced CPA about this credit, reach out to us today at: ATS ADVISORS

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