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Can you clarify what type of income you need to subtract? Thanks. @mdtquestioner
My mortgage lender gives me a refund on a certain percentage of my interest every year. Since I itemize, I have to 'add back' the mortgage interest refund each year. The IRS says I have to put this as additional income rather than just reducing my interest amount in the deduction. Because Michigan does not give tax deductions for most things that are itemized deductions on federal form, I have to pay taxes on all my income. Therefore when the federal forms calls it 'additional income', the State of Michigan form will automatically tax me on it, but since it is not actual income, it is just a reimbursement of mortgage interest, I don't need to pay Michigan taxes on it. I have always entered it in the Michigan schedule 1 on Miscellaneous Subtractions from Income line - this is my first year using Turbo tax online rather than another brand. But Turbo Tax does not have this line available from what I can see, they just have the other more specific subtractions from income lines. If I use one of those, it will go into a line that says it is for something it isn't for.
In the Michigan interview, after the screen 'Here's the Income that Michigan Handles Differently' you're asked about specific income items. If you reported 'Other Income' in your Federal return, you'll get a screen showing the Federal amount, and an entry for the amount that belongs to MI. Subtract your mortgage interest refund from the Federal amount for your MI amount entry.

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