Dear Neighbor,
The new year means tax season is upon us. The good news is that our new Majority in the Michigan legislature passed a number of measures to potentially reduce your tax burden and keep more of your hard-earned dollars, so this newsletter is here to help you navigate those changes and maximize your savings opportunities.
As you work to file your federal and state income taxes — due by April 15, 2024 — refer back to the information here to help maximize your return.
As always, should you ever need assistance communicating with the Treasury department or any other state agency, reach out — we are here to serve you. You can contact me toll-free at (855) 347-8008, by email at SenMMcMorrow@senate.michigan.gov or through my website online at SenatorMcMorrow.com.
Sincerely,
Lowering MI Costs
We know that money is still tight for so many. While inflataion is thankfully coming back down from its peak, it can take time for your own savings to catch up. To help, State Senate Democrats finalized the Lowering MI Costs Plan last March — the biggest tax relief initiative for Michiganders in decades. The plan finally repeals the so-called “retirement tax” that hurt seniors on a fixed income, and expands the Working Families Tax Credit, helping more Michigan families and seniors save money.
Expanding the Working Families Tax Credit
To help alleviate financial hardship for families, Senate Democrats created the Working Families Tax Credit — quintupling Michigan’s match of the federal Earned Income Tax Credit (EITC) from 6% to 30%. Public Act 4 of 2023 will help 700,000 Michiganders who have the hardest time affording the basics save an average of $3,150 per year. The expansion takes effect on February 13, 2024. To qualify for the Michigan EITC, you must already qualify for the federal credit.
In addition to claiming it this tax season, the expanded Michigan EITC is also retroactive to the 2022 tax year (last tax season). Federally eligible individuals who claimed the Michigan EITC on their 2022 taxes received the original 6% credit. After the expansion takes effect, the Michigan Department of Treasury will begin to issue supplemental check payments over a period of 5-6 weeks, to provide eligible taxpayers with the remaining 24% portion of the credit. The Michigan Department of Treasury encourages residents to stay up to date and verify their eligibility at Michigan.gov/taxes.
Repealing the Retirement Tax
The retirement tax was a tax first levied by Governor Snyder a decade ago that had a substantial negative impact on seniors already on a fixed income. Last year, we finally passed a repeal of this tax into law, which will be phased in over four years and will put an average of $1,000 back in the pockets of 500,000 households. This legislation provides targeted and equitable relief for retirees who had planned for a set income in retirement.
Public police officers and firefighters, county correction officers, state troopers and sergeants will receive the full exemption beginning on February 13, 2024. Michiganders from other professions will have the option to choose the best taxing situation for their retirement benefits, by opting into either the tier structure subtraction or phase-in subtraction until the full repeal takes effect in 2026. You may wish to consult with a qualified tax preparer to ensure you are able to deduct the maximum amount of retirement benefits.
Tax season is here, so it’s time to get out your tax documents and file with the state and federal governments before the national deadline on Monday, April 15, 2024. Here are tips on how to take advantage of some of the most common taxdeductions while staying clear of common scams that target people during the early parts of the year.
For federal returns, the IRS’ official website is IRS.gov, and they will only reach out to you through regular mail delivered bythe U.S. Postal Service. The Michigan Department of Treasury’s official website is Michigan.gov/treasury, but they also have a dedicated tax page at Michigan.gov/taxes. Visit IRS.gov for more information and to learn additional ways to protect
yourself from tax scams.
Charitable Contributions
In most cases, you can claim the full amount you give to an IRS-qualified organization as an itemized deduction on your federal taxes. Eligible deductions in the State of Michigan may differ from those eligible federally, so be sure to check with IRS.gov or your tax preparer, if applicable.
Home Ownership
Costs such as property taxes and points paid to get a lower home loan interest rate are deductible, as is interest on home equity loans up to a certain threshold. Your deduction is generally limited if all mortgages used to buy, construct or improve your first home (and second home, if applicable) total $750,000. Mortgages that existed before December 14, 2017, will continue to receive the same tax treatment as under the old rules.
Medical Expenses and Other Deductions
Medical costs — including costs associated with preventative care, surgeries, dental, vision, psychologist visits, hearing aids and more — that exceed 7.5% of your federal adjusted gross income may be claimed on your taxes. Be sure to include them as itemized deductions. You may also qualify for deductions from student loan interest, child and dependent care, mortgage interest and more.
To learn more details, visit IRS.gov/credits-deductions.
Small Business Expenses
Generally, most types of business insurance, the cost of utilities, rent payments, expenses related to the purchase and upkeep of company-owned vehicles, office supplies and furniture are all tax deductible.
Visit IRS.gov/credits-deductions/businesses for more details.
Veterans and Their Families
Nearly 568,000 veterans call Michigan home. So many put their life on the line — sacrificing their comfort and safety — to defend our ideals of liberty and democracy. After their service to our state and nation, it’s our responsibility to ensure they have the benefits they deserve. A 2023 reform requires a property tax exemption on real property used and owned as a homestead by a disabled veteran — or a veteran’s surviving spouse — to remain in effect, until rescinded by the individual granted the exemption or denied by the assessor.
Understand Refund Timing
The IRS processed more than 90 million tax returns last year. Nevertheless, they are very efficient at turning returns and payments around in 21 days for those who file electronically. If you mail in a paper return, the IRS has warned it can take as long as six months or more to process. However you file, you can check the status of your refund through the “Where’s My Refund?” page on the IRS website.
Visit IRS.gov/refunds for more details.
Clean Energy Provisions in the Federal Inflation Reduction Act
In August 2022, President Joe Biden signed the federal Inflation Reduction Act into law, which includes nearly two dozen tax provisions designed to save families money on their tax and energy bills, while accelerating the deployment of clean energy, clean vehicles, clean buildings and clean manufacturing. As you file your 2024 taxes, keep deductible items in mind.
Home Clean Electricity Improvements
If you made qualified energy-efficient improvements to your home after Jan. 1, 2023, you
may qualify for a tax credit up to $3,200. Some of the qualified improvements include:
- Solar panels for electricity from a local provider.
- Home back-up power battery storage with capacity of 3 kWh or greater.
- Electric or natural gas heat pumps and water heaters; central air conditioners; natural gas, propane or oil water heaters, furnaces or hot water boilers that meet or exceed the specific efficiency tiers established by the Consortium for Energy Efficiency.
- Insulation materials and systems that meet International Energy Conservation Code standards.
- Exterior windows that meet Energy Star’s Most Efficient requirements.
Electric Vehicle Credits
Michiganders who have purchased a new electric vehicle, qualified plug-in EV or fuel cell electric vehicle may qualify for a credit up to $7,500. Please note that eligible vehicles must meet critical mineral and battery component requirements. To qualify, your adjusted gross income either this year or last year must be below the following thresholds to qualify: $300,000 for married couples filing jointly, $225,000 for heads of households or $150,000 for all other filers. For an interactive guide to energy credits available under the Inflation Reduction Act, visit cleanenergy.gov
Take Advantage of Free Services to File Your Taxes
Federal Assistance With Tax Preparation
The Internal Revenue Service (IRS) has a Free File Program, which lets qualified taxpayers prepare and file federal income tax returns online using tax preparation software. It’s safe, easy and no cost to you. It provides two ways to prepare and file your federal income tax online for free:
Guided Tax Preparation
The guided option provides free online tax preparation and filing at an IRS partner site. Their partners deliver this service at no cost to qualifying taxpayers. Taxpayers whose adjusted gross income (AGI) is $73,000 or less qualify for a free federal tax return.
Free File Fillable Forms
Those whose gross income is greater than $73,000 can take advantage of Free File Fillable Forms — electronic federal tax forms, equivalent to a paper 1040 form. You can learn how to prepare your own tax return using form instructions and IRS publications if needed.
Local Assistance With Tax Preparation
There are free tax services for Detroit area residents available through the Accounting Aid Society for people whose household income is less than $58,000. You can make an appointment with this free service online or by phone.
Accounting Aid Society
3031 West Grand Blvd, Suite 470,
Detroit, Michigan 48202-3194
AccountingAidSociety.org | (313) 556-1920
MI Free Tax Help
Statewide, eligible residents can connect with a free tax preparation expert who can help you claim all the tax credits available, at no cost to you, ever. Simply visit MichiganFreeTaxHelp.org or call 2-1-1 on any phone
MiABLE Savings Account The MiABLE Disability Savings Program
was created to allow individuals with disabilities and their families to save funds for Qualified Disability Expenses that support health, independence and quality of life without jeopardizing eligibility for necessary federal benefits. An individual is eligible if they became disabled or blind before the age of 26, and either is currently entitled to Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) or gets a disability certification under rules the U.S. Treasury will write. For more information or to set up your account, visit miable.org
Free Credit Report
Access your free report at: AnnualCreditReport.com
Michigan Attorney General Dana Nessel is reminding residents that they can access free weekly credit reports from each of the three main credit reporting agencies: Equifax, Experian and TransUnion. The program was initiated in 2020 after the pandemic put many people’s finances in dire straits. After two extensions, the program is now permanent.
Credit reports contain the financial and personal data used by businesses and potential crediotrs to assess an individual’s financial fitness for rentals, house and vehicle financing, insurance or even a job. The approval of your application could be impacted by inaccurate information, and it benefits residents to be knowledgeable about what is in their credit report.
The free weekly credit report can be accessed from AnnualCreditReport.com, the only offical site for free credit reports authorized by federal law. Other sites offer free credit reports, though residents should excercise caution and watch for fraudelent sites designed to steal your money or your personal information.
To make a formal complaint, call the Attorney General’s Consumer Portection Division at (517)-335-7599.
VERIFY YOUR TAX CREDIT ELIGIBILITY!
The Michigan Department of Treasury encourages residents to stay up to date and verify their eligibility by visiting Michigan.gov/taxes.
MiABLE Savings Account
The MiABLE Disability Savings Program was created to allow individuals with disabilities and their families to save funds for Qualified Disability Expenses that support health, independence and quality of life without jeopardizing eligibility for necessary federal benefits. An individual is eligible if they became disabled or blind before the age of 26, and either is currently entitled to Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) or gets a disability certification under rules the U.S. Treasury will write. For more information or to set up your account, visit miable.org.
