Michigan Compiled Law Section 206.30 determines whether a pension distribution is taxable or nontaxable to Michigan.
In TurboTax, in the Michigan state income tax return, at the screen Retirement Income and Pension Summary, the software determines the category of the pension distribution reported in the Federal 1040 income tax return.
The software identifies the nature of the pension distribution based upon the answers reported in the Federal income tax return at the screen Where is your distribution from? and What kind of retirement plan do you have with Retirement?
See the Michigan Retirement and Pension Benefits here.
Adjusted Gross Income (AGI) is calculated on your federal income tax return and is the starting point for your Michigan individual income tax return and may include your retirement or pension benefit distribution. AGI is the starting point for the individual income tax return.
MCL 206.30(9),(10), and (11) provides guidance on the retirement benefit subtraction. To determine your allowable retirement or pension subtraction, we must consider (1) if your retirement income is considered a qualified distribution and (2) what your tax treatment options are for a given tax year.
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