In the State of Michigan, does a Michigan Public School Employees Retirement System pension qualify as a Government pension not subject to State Income Tax?

  • My state refund jumped way up when I clicked the button that says it is a qualified government pension... but I'm quite sure we have to pay state taxes on our pensions.

To be more specific, when married filing jointly, Michigan takes into account the birthdate of the OLDER spouse in determining what amount is subtracted from taxable pension income.  For married filing jointly with the older spouse's DOB prior to January 1, 1952, the couple may subtract up to $40,000 of MPSERS pension income.

Unfortunately my TurboTax software has not yet caught up to this, even though it did last year.

    It is a government pension, but it may be subject to Michigan tax if you do not meet the age requrirment.  You must be 60 going into 2012 to get the $20,000 deduction.  Turbo tax has an error in the software, it is giving the deduction to people who became 60 in 2012, which is incorrect, to fix this I had to use an "N" to describe my government pension.  If you are older than 66 in 2012 then you do not have to pay anythng for Mi taxes.
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