Michigan Federal Income Tax Information
Income taxes are taxes paid on money earned. Typically, taxes are paid on a state and federal level for U.S. taxpayers. In some instances, a local income tax is paid as well. In Michigan, qualified taxpayers are required to pay state and federal income taxes and tax returns for both are due by April 15th. Additional deadlines apply for self-employed individuals.
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Income
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For federal and state income tax purposes in Michigan, income is looked at in two ways: household income and adjusted gross income. Household income is the amount of money earned by all adult members of a household. Adjusted gross income, or AGI, is the amount of income that is taxable. Therefore, this is the amount of money earned minus any deductions that the taxpayer qualifies for.
Deductions
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The state of Michigan allows certain deductions to the household income. A deduction is best defined as income that is non-taxable. Some deductions can only be counted for state income tax purposes but not for the federal AGI. One deduction that is only counted for Michigan are bingo winnings in the state over $300. Some other deductions that can only be applied to the state income are farm income received from another state, bonuses received from another state and the taxable amount of Social Security benefits. All if these items are still included in the federal AGI.
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Tax Rates
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In Michigan, the state income tax rate is 4.35 percent regardless of income amount. The federal income tax rate varies based on taxable income amount and filing and marital status. The income tax rate increases as the taxable income increases. The lowest tax bracket pays 10 percent, while the highest pays a rate of 35 percent.
Credits
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Michigan offers various credits to taxpayers on the state level that can be used on income tax returns. The federal government also offers credits. The Earned Income Tax Credit is available on a national and state level in Michigan. This credit is available to taxpayers of a certain income bracket. this income bracket is dependent on marital and filing status. For Michigan taxpayers who qualify for this credit, 20 percent of the credit amount can be applied on the state income tax return.
Forms
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The most common form for preparing a federal income tax return is the 1040. This form can be used by individuals filing separately or jointly. A 1040EZ form is available for individuals who are filing and do not have dependents. This is a more compact and shorter version of the 1040. For Michigan state income tax returns, taxpayers use the MI-1040. Both the 1040 and MI-1040 come with instructions.
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References
- Photo Credit A businessman calculating expenses at tax time image by Christopher Meder from Fotolia.com
