Michigan public pension income exemption

Forum|Forum|5 years ago
March 18, 2021
1 reply
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Checking the info section about exemption of public pension income it appears that my Ohio Public Employee Retirement System pension should be exempt from inclusion as income for my Michigan income tax filing. However, the questions and exclusions in the TurboTax Deluxe program show there are other requirements or limitations to what public employee pension incomes qualify for exemption from state taxation. Which is correct?

AmyC

Level 15

MI has a very, very convoluted system based on age, standard deduction allowed and federal taxability of all incomes. Depending on your age and income, it may be exempt, partially or not at all,

They have different tiers for the standard deduction allowed which for a married couple has a broad range.

Here is just one of several:

Tier 2 Michigan standard deduction. If the older of the taxpayer or spouse (if MFJ) was born during the period of January 1, 1946 through December 31, 1952, and reached the age of 67 before December 31, 2020, a deduction of $20,000 (Single, MFS) or $40,000 (MFJ) is available against all income and will no longer deduct retirement and pension benefits. The standard deduction may increase by $15,000 ($30,000 if both) if the taxpayer and/or spouse received retirement benefits from SSA exempt employment. Reduce the standard deduction by any amounts reported on line 11 and any military pay included on line 14, Schedule 1

See page 2 of Pension Schedule Instructions for full details.

Taxes - 2020 Individual Income Tax Forms and Instructions

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acpromediaAuthor

Level 2

Thank you Amy. You're right, very convoluted. For example, I was born the early part of 1953 but I reached 67 before December 31, 2020. How could somebody be born by December 31, 1952 and not be 67 by December 31, 2020. And we do file MFJ. I guess I need to research this more carefully rather than just relying on Turbo Tax. I'm amazed the programmers can keep up on all the individual state variations.