The reason the MESP 529 is showing as a subtraction in your return is that it is showing as income in your AGI. Michigan return is subtracting it out so that you do not pay taxes on the MESP 529 funds. To see what I am talking about and to remove the subtraction if you want follow these steps:
- Go into your State return and click on Edit. On the next screen
- Click on the "Start" or "Edit" button next to Income
- Answer the questions on each screen and continue until you come to a screen that says "Here's the income that Michigan handles differently"
- Scroll to Education and
- Click on the "Learn More" button next to "Education Savings Program Withdrawals". It states:
A qualified withdrawal is any amount you take out from a Michigan Education Savings Program, MI 529 Advisor Plan and/or Michigan ABLE Account to pay for qualified higher education expenses. Qualified higher education expenses include tuition, fees, supplies, certain room and board costs, books, and equipment required for college enrollment or attendance.
If any amount of a qualified withdrawal was included in your gross income you should enter that amount on this screen.
- Click on Start and this is where you can remove the amount that is being subtracted. Before you do that, make sure that there was not a portion of your MESP 529 withdrawal that was taxed on your federal return.
Remember being subtracted means you are not paying taxes on the amount being subtracted. If you remove this amount from this box, this amount will remain in your taxable income and you will actually be paying more taxes.
If you are sure that there are no qualified withdrawals included in your income then, this is where you would remove the amount from the subtraction.
