Michigan Additions

Michigan Additions: Understanding What to Report on Your Tax Return

When filing your Michigan individual income tax return, certain additions to your income must be reported on Schedule 1 of Form MI-1040. These additions are typically items that are included in your federal taxable income but may require special treatment or reporting at the state level.

Common Additions to Michigan Taxable Income

Gross interest, dividends, and income from obligations or securities of states and their political subdivisions (other than Michigan) – This is reported on Schedule 1, line 1, and carried forward to MI-1040, line 11.
Deduction taken on federal return for self-employment tax or other taxes measured by income – This is reported on Schedule 1, line 2, and carried forward to MI-1040, line 11.

These additions ensure that Michigan’s tax base accurately reflects income that may be subject to state taxation, even if it was deducted at the federal level.

When to Use Form MI-1040D

Form MI-1040D is used specifically to adjust Michigan taxable income for capital gains or losses attributable to:

Properties located in other states and subject to Michigan’s allocation provisions.
Gains or losses subject to Michigan’s apportionment provisions (refer to Form MI-1040H for those).

Only use Form MI-1040D if you have such capital gains or losses. The form helps determine the portion of gains or losses that are taxable in Michigan.

Reporting Capital Gains and Losses

For capital gains and losses from the sale of business property, use Form MI-4797. This form requires you to enter federal gains or losses in column D and the portion subject to Michigan tax in column E. Line 10 of Form MI-4797 specifically references federal Form 4797, column F and G.

Additionally, Form MI-8949 is used for reporting sales and other dispositions of capital assets. It is important to note that the amount reported on MI-1040D, line 6, includes the amount from U.S. Schedule D, line 8a, column h.

Supporting Documentation for Additions

When reporting additions such as income from oil, gas, or mineral extraction, use Form 5889. This form reports income and expenses related to Michigan’s natural resource extraction and is carried to Schedule 1 for individual filers or Form MI-1041 for fiduciary filers.

Supporting documentation may be required for certain claims. For example, if claiming a Michigan flow-through entity (FTE) tax credit on Form MI-1041, you must include a copy of the federal return (Form 1065 or 1120S) and other required schedules.

Source:

Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions.

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