Letter of adjustment from Michigan

[swkorb]

I received a letter of adjustment from the Michigan Department of Treasury related to my 2022 return.  It references that the adjustment in their favor was related to the Michigan Homestead Property Tax Credit or Michigan Home Heating credit (credits I did not claim).  But then the letter goes on to state:

"Your claimed subtraction for the Michigan Educational Savings Program was adjusted to agree with the amount included in your AGI on your federal return.  A misc subtraction related to the MESP includes any portion of a qualified withdrawal from a MESP that is included in federal AGI.  Any amounts not included in AGI or that are already deducted on the federal return to arrive at the AGI, do not qualify for this subtraction."

I have no idea why I received this letter.  I've deducted contributions to my kids' MESP accounts for years on my Michigan state return, and started taking withdrawals from one of the accounts back in 2021 when my daughter started college, and have not experienced this issue before.  Any guidance would be greatly appreciated.

[Bsch4477]

You have to respond to the letter from Michigan. 

[dheerema]

I got the same thing last year and assumed I did something wrong.  Got it again for 2023 and they adjusted my return by almost 1,000.  The problem is that Turbotax entered a huge miscilaneous subtraction to the michigan sechedule 1.  I can not seem to figure out where that subtraction came from. 

This is a turbotax issue.  

[swkorb]

Thanks for the response @dheerema.  I also received the same letter in 2023, increasing my tax by about $1000.  The last two tax years I had qualified withdrawals from my Michigan MESP 520 plan, from what I was reading that could be the cause of Michigan disqualifying my claimed deductions for 529 contributions during the year?  I would love for a tax professional from Michigan to weigh in.

[swkorb]

typo - "529" not "520"

[dheerema]

Can you check your michigan return and look at schedule 1?  That is the issue.  I have a subtraction in my AGI that was apparently not allowed.  Curious if you have the same.