- 4 -
|
• S corporation shareholders, except shareholders of If you have entered into more than one agreement with the
S corporations who had an FDRA before January 1, 1989, MDARD, the sum of the taxes under each agreement is
and in 1991 elected to file under the Single Business Tax used to compute your credit. The amount of credit you will
(SBT) Act on C-8022 receive is based on total household income.
• Grantor trusts (if treated as an owner under Internal
Computing the Homestead Property Tax Credit
Revenue Code (IRC) Sections 671 through 679)
You must include your total Farmland Preservation Tax
• Trusts created by the death of a spouse if the trust
Credit received during the tax year in total household
requires 100 percent of the income from the trust to be
resources. Enter the amount of credit you received in 2022
distributed each year to the surviving spouse.
on the MI-1040CR, line 16, MI-1040CR-2, line 15, or
The following should file a Farmland Preservation
MI-1040CR-7, line 21. Homestead Property Tax Credits
Tax Credit (Form 4594) with a Michigan Business Tax
are not included in Michigan total household resources. If
(MBT) return:
you included this amount in your taxable farm income, you
• Estates, including property taxes from the date of death, may subtract it from your total household resources.
and farm income required to be reported on the entity's
Effect on Your 2022 Taxable Farm Income
U.S. Form 1041.
The portion of your Homestead Property Tax Credit
• Corporations other than S corporations who made the
that is for farm buildings and land is business related. To
election to file and pay under the MBT beginning with
determine the portion that is business income, divide the
the taxpayer’s first tax year ending after December 31,
taxable value of your buildings and farmland by the total
2011.
taxable value of your property, then multiply by the credit
• S corporations that had an FDRA before January 1, 1989,
(see below). Your local assessor can show you how your
and in 1991 elected to file C-8022.
total taxable value was determined.
• Trusts, except as noted previously, who made the
TV of farmland portion Homestead
election to file and pay under the MBT beginning with
of homestead and buildings x Property Tax
the taxpayer’s first tax year ending after December 31, Total taxable value Credit amount
2011, or who had claimed the credit in a previous year
under the Income Tax Act but are no longer eligible as a = Portion of Homestead Property
result of the death of the owner of the grantor trust. Tax Credit that is business income
Form 4594 is available at www.michigan.gov/taxes or by
You must include the total Farmland Preservation Tax
calling 517-636-4486.
Credit and the business portion of your Homestead
What to Do With a Jointly Payable Check Property Tax Credit received during the tax year in
Take the check, remittance advice, and a copy of your your 2022 federal AGI. If you own your property as an
FDRA(s) to your county treasurer(s). He or she will ask individual but the farming activity is operated under
you to endorse the check, then use the refund to pay any a partnership, S-Corp or LLC, report the Farmland
delinquent taxes. Any amount left will be refunded to you. Preservation Tax Credit on your personal return.
Was your 2021 tax refund (MI-1040, line 34) greater than
Property Taxes That Can Be Claimed for Credit
the amount of your 2021 Farmland Preservation Tax
The property taxes levied in 2022 on enrolled land can Credit (MI-1040, line 26) plus the business portion of your
be claimed for the 2022 credit, regardless of when they Homestead Property Tax Credit? If yes, you may subtract
are paid. The one percent collection fee may be included. on Schedule 1, line 16, the excess refund amount you
Special assessments (those not based on State equalized or received in 2022 to the extent it was included in federal
taxable value), penalties, and interest cannot be claimed. AGI.
Taxes on land not eligible for either the principal residence Land Owned by a Person Under a Life Estate
or qualified agricultural property exemption usually are
not eligible for a Farmland Preservation Tax Credit. The A person in possession for life under a life estate with
exception is rental property where the tenant participates remainder interest to another person may claim all the
in the farming operation at least 1,040 hours per year. To property taxes to compute the credit. However, the life
compute the taxes that can be claimed for credit, exclude estate holder and the person(s) holding the remainder
the school operating tax and multiply the balance by interest may choose to divide the property taxes in the
the percentage of exemption allowed by the local taxing same manner as they divide revenue and expenses. A
authority. See example below: written agreement must be included with each return.
Taxes levied .............................................$2,000 Land Owned by a Partnership
School operating tax ...................................$350
Property taxes on land owned by a partnership are allocated
Principal residence exemption.....................60%
to the partners based on the partner’s percent of income or
$2,000 $1,650 ownership. All partners must use the same basis for filing.
- 350 x 60% If the partnership files a U.S. Form 1065, the percent is
$1,650 $990 May be claimed for credit on each partner’s Schedule K-1. If the partnership is not
required to file a U.S. Form 1065, the percentage of income
4
|