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Michigan Military Filing Information

I am in the Military. Michigan is my home state of record, but I have not been stationed in Michigan for several years. Am I still required to file a Michigan Income Tax return?

Answer:
Yes. If Michigan is your home of record you are considered a Michigan resident and you are required to file a Michigan income tax return (MI-1040) regardless of where your income is earned. Michigan does not tax active duty pay. However, most interest, dividends, capital gains and other income received by a Michigan resident are subject to Michigan income tax. You should file a MI-1040 and Schedule 1 as a Michigan resident and subtract your military pay to determine Michigan taxable income.

If I am a Michigan resident stationed outside of Michigan and own a home in Michigan, can I claim a property tax credit?

Answer:
Yes, as long as you own and maintain your Michigan home, and have not rented it out to someone else, you may claim the credit.

If I am stationed in Michigan, does that mean I am a Michigan resident?

Answer:
Not necessarily. If you were a Michigan resident when you entered the military, you are still a Michigan resident, regardless of where you are stationed. If you were a resident of another state, you maintain your residency status in your home state, even if you are stationed in Michigan. A person may change his or her residency while in the military. Unless you make the change, you remain a resident of the state that you resided in when you entered the military.

Is National Guard pay considered military pay?

Answer:
Only the following National Guard pay is considered military pay and therefore exempt from Michigan tax:

- Weeknight and regular weekend drills
- Summer camp
- Pay received for riot duty only if nationalized by the president of the U.S.
- Pay received for duty in the gulf coast states related to Hurricane Katrina

I am active duty stationed overseas. When do I file my taxes?

Answer:
The deadline for filing a Michigan tax return is April 15. The deadline for filing and paying is extended for Military personnel stationed in a combat zone, and for their spouses, while the person is in the combat zone and for 180 days afterward.

It is possible for members of the Armed Forces to qualify for the extension without being in a combat zone. If you serve in direct support of those in the combat zone and receive hostile fire or imminent danger pay, you qualify for the extension. If you are deployed overseas, away from your permanent duty station, in support of operations in a qualified hazardous duty area, but outside the qualified hazardous duty area, you qualify for the extension. If you are hospitalized outside of the U.S. as a result of injuries suffered in the combat zone, you also qualify.

There is no requirement for you to certify your presence in a combat zone to qualify for the extension. Your branch of the military reports that information to the IRS for you.

If I was overseas for all of 2013, am I still required to file a Michigan return?

Answer:
Yes, Michigan residents are required to file a Michigan return, regardless of where income is earned. However, military pay is exempt from Michigan tax; therefore, you should file an MI-1040 and Schedule 1 and subtract military pay, to the extent it is included in AGI.

If a military nonresident has non-military income in Michigan, is he/she required to file a Michigan income tax return?

Answer:
Yes, nonresidents are subject to Michigan income tax on all non-military income earned in Michigan or attributable to Michigan. A nonresident would be required to file a Michigan income tax return (MI-1040) and a Michigan Schedule NR for nonresidents. Exception: Residents of states having a reciprocal agreement with Michigan (Illinois, Indiana, Kentucky, Ohio, Wisconsin and Minnesota) are not required to pay tax to Michigan on income earned in Michigan. They pay tax to their state of residency.

Are military exit benefits and military separation pay exempt from Michigan income tax?

Answer:
Compensation paid from federal appropriations, including retirement benefits, for military services in the armed forces of the United States is exempt from Michigan income tax. Exit benefits and separation pay that are classified as military compensation may be deducted to the extent they are included in federal adjusted gross income.

Are military survivor benefits exempt from Michigan income tax?

Answer:
Michigan will not tax military survivor benefits that are exempt from federal income tax and are not included in federal adjusted gross income. Survivor benefits that are classified as military compensation or military retirement pay may be deducted to the extent they are included in federal adjusted gross income for the surviving spouse only.

Are retirement benefits that pass to the spouse of a deceased military member exempt from Michigan income tax?

Answer:
Military retirement benefits that pass to the spouse of a deceased member of the armed forces of the United States are exempt to the extent they are included in federal adjusted gross income.

Are retirement benefits of a deceased military member that are passed to a beneficiary other than a surviving spouse exempt from Michigan income tax?

Answer:
Military retirement benefits that pass to beneficiaries other than a surviving spouse are subject to Michigan income tax.

Are military retirement benefits exempt from Michigan income tax?

Answer:
Military retirement benefits paid to retirees of the armed forces of the United States for services performed while a member of the armed forces are exempt from Michigan income tax. Military retirement benefits may be deducted to the extent they are included in federal adjusted gross income. As with other pensions, only the participant, or in the case of death or disability, his or her surviving spouse, may claim the subtractions.

Is military pay exempt from Michigan income tax?

Answer:
As a Michigan resident, you are required to file a Michigan Income Tax return (MI-1040) regardless of where your income is earned. Michigan does not tax active duty pay. However, most interest, dividends, most capital gains and other income received by a Michigan resident are subject to Michigan income tax. You should file a MI-1040 and Schedule 1 as a Michigan resident and subtract your military pay to determine Michigan taxable income.

Federal Military Spouses Residency Relief Act
The Military Spouses Relief Act was signed into law on November 11, 2009, effective for tax years beginning on or after January 1, 2009. It may affect the state income tax filing requirements for a spouse of an individual in the military. Under the Act, the spouse of an individual in the military is a non-resident of a state and consequently not subject to that state's taxation if:

- The service member is present in that state due to military orders
- The spouse is in that state solely to accompany the service member
- The spouse maintains a domicile in another state.

Therefore, a military spouse who is a Michigan resident and plans to return to Michigan as his/her permanent home should include income earned in the other state on his/her Michigan Income Tax return. A Michigan military spouse may not claim a credit for the income taxes paid to another state. The military spouse must file a non-resident return with the other state to obtain a refund of taxes paid to that state.

Beginning with tax year 2010, if the non-military employer of a Michigan military spouse in another state does not file Michigan withholding (and most will not), the Michigan taxpayer should make estimated payments to avoid penalty and interest for underpayment of estimates. The taxpayer may be able to:

- Request their employer(s) withhold Michigan taxes, or
- Request that no taxes be withheld from their salary and wages for the other state.

Statements verifying non-residency may be required by either state.