State of Michigan tax on police pension and local government

[Northwalldiver]

We file a joint return. My husband receives a pension as a retired police officer. I collect a pension from my work at a local County Government. Turbo Tax is calculating his pension correctly, meaning no state tax owed. The issue is Turbo Tax is also identifying my pension as not being taxable for 2023. I have reviewed my entries confirming that I have checked the boxes that my pension is not from work as police, fire etc..  though it is a qualified local government pension. I have read Public Act 4 of 2023 and I really do not believe that my pension is non-taxable for Michigan filing for tax year 2023. Help please 

[KrisD15]

It depends on your and your husbands ages and if the county retirement system exempted you from paying into Social Security. 

The easiest thing for you to do might be to use the Michigan "2023 Retirement & Pension Estimator" to verify.

[Northwalldiver]

Thank you for that suggestion. I just ran the estimator and it does state, as I expected, that I am not eligible for a tax reduction for my pension. So i am unsure why Turbo Tax is including my pension on the 4884 as exempt from taxes

[JohnW152]

To see why you're qualifying for the exclusion in TurboTax Online: 

1. Open TurboTax Online
2. Select  Tax Home in the left pane
3. On the  Hi, let's keep working on your taxes! screen, select the dropdown on the right side of the State Taxes box, then select Start, Continue, or Review/Edit
4. In the left pane, select Prepare State
5. Proceed through the screens until you come to the Status of your state returns screen
6. Select  Start, Continue or Edit to the right of Michigan.  
7. Proceed through the state screens until you get to the Here's the income that Michigan handles differently screen.  Select Start or Revisit to the right of Retirement Income and Pension Deduction
8. Pay attention on the Retirement Income and Pension Summary screen.  It looks like this:

You can see, under TYPE, what code might've been entered when you input your retirement income.

Then, below that, you can see a guide showing what each retirement type is, and what type of exclusion it qualifies for.

If the code for the retirement income is incorrect, select Edit next to the relevant income source and make any adjustments necessary.

[Northwalldiver]

Thank you for your assistance. I reviewed the screen and both pensions are identified as “G”  as both are from qualified government source. I continued on to the next page - “Any of These Retirement Situations” where for only my husband’s pension is the box “received qualified benefits from fire, police or corrections service” checked.  For me i have checked the box “none of these apply”.  I have ran the review and get the response that “there are no errors in your state return”   TT is still reflecting that my pension is nontaxable for the state of Michigan. My age for 2023 is 60 and my husband’s is 61 and these are correct in TT personal info file. I am not sure where to go from here.

[AmyC]

I went through the flow chart on pages 22 and 23 of Pension Schedule Instructions as it goes by one qualifying pension, age of oldest and more. It didn't seem that you qualified based on my quick look.

If you deselect the pension so that it shows as a regular pension, rather than government,  your return should be correct.