Michigan Farmland Preservation Credit
The Michigan Farmland Preservation Credit is designed to support landowners who enter into development rights agreements to preserve farmland and open space. This credit helps reduce Michigan income tax liability for eligible individuals and entities who participate in the Farmland and Open Space Preservation Act program.
Eligibility and Claiming the Credit
- Eligible taxpayers must be enrolled in the Farmland and Open Space Preservation Act program.
- The credit is based on household income, which allows for a net operating loss (NOL) deduction.
- Individuals must file Form MI-1040CR-5 to claim the credit.
- For those who purchased land during the tax year, the credit is prorated based on the period of ownership.
Special Considerations
- Fiduciary Returns: The credit cannot be claimed on fiduciary returns. If a fiduciary (estate or trust) wishes to claim the credit, they must use Form 4594 for corporate farm owners, estates, or trusts.
- Bankruptcy Filers: If you are enrolled in the program and have filed for bankruptcy under U.S. Bankruptcy Code chapters 7, 11, 12, or 13, you may still claim the credit by filing MI-1040CR-S5 with your Michigan income tax return.
- E-filers: While not required, submitting the “Farmland Schedule K-1 Worksheet” (available on Treasury’s website) can help avoid processing delays and reduce correspondence with the Michigan Department of Treasury.
How to Claim
Complete Form MI-1040CR-5 and attach it to your Michigan Individual Income Tax Return (Form MI-1040). The form includes instructions for calculating the credit based on household income and ownership period. Farmers should use this form instead of other property tax credit forms unless otherwise specified.
Source:
Form MI-1040CR-5: Farmland Preservation Tax Credit
Schedule CR-5 Instructions
Form MI-1040: Michigan Individual Income Tax Return
Disclaimer: Always verify details with official forms and instructions from the Michigan Department of Treasury or Federal IRS. OLT (Online Taxes) provides guidance based on retrieved information but does not guarantee accuracy for individual cases.