MI1040CR math error(?)

[LateFiler2022]

I don't understand the math being used here by Turbo Tax:

line 42 has value 1201.00

line 43 has value 100%

line 44 has value 1197.00

Last I checked, 100% of x is x, so why is line 44 not 1201.00?

PART 2: PROPERTY TAX CREDIT CALCULATION All filers must complete this section.
42. Enter amount from line 38, 39 or 41, or from Worksheet 4 (see instructions) for FIP/MDHHS
recipients.............................................................................................................................................. 42. 00
43. Percentage from Table B (see instructions) that applies to the amount
on line 33................................................................................................. 43. %
44. PROPERTY TAX CREDIT. Multiply amount on line 42 by percentage on line 43. Enter amount here
and if you file an MI-1040, carry this amount to MI-1040, line 25......................................................... 44. 00

[JulieS]

In some cases the amount on line 44 is limited. If line 33 is over $51,000 or if the return is not for a full year, there would be an alternate calculation.

Here is an excerpt from the instructions for this line:

"If Total Household Resources on line 33 is over $51,000, line 44 is automatically reduced according to the MI-1040CR, Homestead Property Tax Credit instructions.

For deceased taxpayers or part year taxpayers, the maximum credit is a proration of $1,500, this is the days alive or a resident in Michigan divided by number of days in the year multiplied by the $1,500. The credit is limited to this amount or credit that was originally calculated, whichever is less."

If this doesn't fully resolve your concerns, please respond back to this thread and we will help you again. 

[LateFiler2022]

This is for a deceased taxpayer (274 days into year), so the reduction to 1201 on line 42 is logical.  However, I still cannot follow what's on the forms.

Line 33 annualized income is between 26,000 and 27,000 so line 37 has the reduced amount of 76%.

Line 36 has 2,569.

Line 38 says 36 * 33 is value and enter on line 42.    2,569 * .76 is 1,952.44, but capped at 1,600.  TT has 1,201 as the value and I cannot determine where this comes from. 1,201 is .750625 of 1600.

Line 42 has 1,201, which is what TT calculated above

Line 43 has 100%

Line 44 has 1,197.  

[MichaelG81]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the  directions below:

TurboTax Online:

1. Sign into your online account. Select pick up where I left off or continue your return.
2. Locate the Tax Tools on the left-hand side of the screen. 
3. A drop-down will appear. Select Tools  
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.

Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent”
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.

Please provide the Token Number that was generated in the response.  

@LateFiler2022 

[MichaelG81]

After doing some careful research for you, I found the calculation is correct, please read further.

The value on line 42 is a percentage of the total credit. To get this amount take the number of days alive divided by 365 (NDA/365)=A. Take the answer or A and Multiply by maximum credit amount  (allocated credit amount)=Line 42. 

And for the famous line 44, there is a worksheet just above the line 44 called Worksheet 4 and 5 I assumed, with the lowered credit amount. I did manually because it does not show calculations. You may want to check on your end; right above Line 44. Also, remember to allocate; especially since the amount on last line is probably more than your 1197 amount. I do not have your token or file and cannot compare, but when doing and after allocating it will come to the correct amount, especially if a renter over 65 or homeowner. Did some mock returns with annualized incomes between 26000 and 27000 for Michigan and checked out.

Let me know if you have further questions, by tagging me @MichaelG81 

@LateFiler2022 

[EDITED 03/09/2023 | 12:31 PST]

Yes, for line 44, the allocated amount comes from Line 33 (amount actually made(THR)/annualized income), it has 2 amounts you must divide the total household resources (THR) by the annualized amount. Get that answer and multiply by 1,600 the maximum credit; that is why it is lower than the amount you gave of 1201.

The $1,201 comes from NDA(274)/365=A; Then, Ax1,600= line 42.

THR/Annualized income=B; Bx1,600= Line 44.

[LateFiler2022]

@MichaelG81 

Hello MichaelG81,

The token is 1091426.

In the files sent, I overrode MI1040CR line 44 to change it from 1197 to 1201.  This was before I saw your most recent note about completing worksheet 5.

Completing worksheet 5, I have values A= 1201, B=41453, C=16581.2.  She lived for 274 days of 2022 (passed on 10/1), and was older than 65.

[MichaelG81]

Yes, for line 44, the allocated amount comes from Line 33 (amount actually made(THR)/annualized income), it has 2 amounts you must divide the total household resources (THR) by the annualized amount. Get that answer and multiply by 1,600 the maximum credit; that is why it is lower than the amount you gave of 1201.

The $1,201 comes from NDA(274)/365=A; Then, Ax1,600= Line 42.

THR/Annualized income=B; Bx1,600= Line 44.

@LateFiler2022 

[LateFiler2022]

But doesn't worksheet 5 supersede this calculation so that the value is actually $1600?  (see my previous comment)

[MichaelG81]

No, the credit may have been full depending on circumstances or in the high 76-90% calculation rate from the table used to calculate credit depending on income and other factors. But since he/she passed away during the tax year, Michigan state will only give a partial credit, the partial credit supersedes the full credit due to the amount of annualized income and/or number of days alive; usually which ever is less. Hope this helps, but I doubled checked it again with another mock return, and the numbers still check out with different income amounts.

@LateFiler2022  

[LateFiler2022]

I see that I missed the statement in the instructions where it states that number supersedes the $1600 in tables 4&5.  Now I see that.  Thanks for your help!

[MoniqueLO_]

Thank you for the update! 

@LateFiler2022