What are my
responsibilities as a pension recipient?
It is your
responsibility to contact your pension administrator to ensure taxes are
being withheld from your pension payments, whether you submit an MI W-4P
If I am not a
resident of Michigan but receive a Michigan pension, is my pension
taxable to Michigan?
No. If you
receive the MI W-4P from your pension administrator, return indicating you
are not a resident of Michigan and mark box 1.
If my spouse passes
away and I am the beneficiary of his/her pension payments, how is that
you are receiving the payments, the pension is treated as though it is
treatment of the pension payments depends on your date of birth. Follow
guidelines for your age bracket.
My spouse has passed
away and I am receiving survivor retirement or pension benefits. What
subtraction can I claim?
spouse who passed away could have subtracted the retirement or pension
benefits while he or she were alive, then the surviving spouse may also
subtract the benefits. The surviving spouse may continue to claim the
subtraction even if the spouse remarries. The surviving spouse benefit
subtraction only applies to distributions from the deceased spouse’s
retirement or pension plan. After the death of one spouse, the retirement
or pension subtraction that the surviving spouse receives as a result of
his or her own employment is based on the surviving spouse’s own date of
George and Alice are married. George was born in 1948 and Alice was born
in 1953. George and Alice both retired in 2012 and began drawing pension
benefits. In 2012, they can subtract up to $40,000 of retirement benefits
because they file a joint return and George was born between 1946 and
George dies. Alice is the beneficiary on his retirement account. After his
death, Alice receives monthly survivor benefits from George’s plan as well
as monthly benefits from her plan. Since George died in 2013, they can
still file a joint return and subtract up to $40,000 retirement benefits
because George was born between 1946 and 1952.
Alice continues to receive benefits from both plans. Alice can subtract up
to $20,000 of benefits she received from George’s plan because she is
single and the benefits would qualify for the subtraction if George was
still alive. She cannot subtract any benefits she receives from her own
plan because she was born after 1952. If the survivor benefits from
George’s plan terminate in a later year, Alice would not be able to claim
My spouse was 67
when he passed away. I am receiving income from interest, dividends and
capitals. I am not yet 67 and I have not remarried, can I deduct the
income from interest, dividends and capital gains?
the spouse who passed away was 67 or older in 2012 then the unremarried
surviving spouse is also eligible to deduct the income from interest,
dividends and capital gains. However, unlike retirement and pension
benefits, the surviving spouse may not claim the deduction after
Tom and Mary are married. Tom was born in 1945 and Mary was born in 1947.
They farmed their entire lives, and in 2010, they decided to retire. They
sold their farm for $2M and lived off their savings.
Tom died. Mary filed a joint return and reported $50,000 of income from
interest, dividends, and capital gains. They can claim a deduction of
$20,115, the maximum subtraction allowed on a joint return for the senior
citizen’s interest, dividend, and capital gain deduction.
Mary files a single return. She can claim a subtraction of $10,058 (as
adjusted for inflation) for the interest, dividend, and capital gain
deduction because she is the unremarried surviving spouse of a senior
citizen born before 1946, and she files single.
remarries in 2014 and files a joint return with her new husband, she no
longer qualifies as a senior citizen for purposes of the senior citizen
interest, dividend, and capital gain subtraction because she is remarried
and was not born before 1946.
If I file a joint
return and my older spouse passes away, will I still benefit from
his/her age bracket?
you begin filing a single return, the pension subtraction will depend on
your date of birth. Follow the
guidelines for your age bracket.
If my spouse and I
are filing Married Filing Separate, how do I determine Total Household
the previously used Total Household Income, the combined income of both
spouses is used to determine
Total Household Resources. For more information see
Special Situations- Married Filing Separate.
If I made post-tax
contributions to my pension, will the money be taxed again?
long as the contributions are excluded from your Federal Adjusted Gross
Income. These contributions are usually reported on a separate line of
When should I
complete the MI W-4P?
W-4P and give it to the administrator of your pension or
annuity payments as soon as possible. The new tax changes take effect
January 1, 2012.
Can I change my MI
W-4P if I have already submitted it to my pension administrator?
may change your elections on the MI W-4P at any time by submitting and
W-4P to your pension administrator.
Is every pension
administrator required to withhold Michigan tax?
companies over whom Michigan has taxing jurisdiction are required to
withhold Michigan tax from your pension and/or annuity payments.
How do I know if my
pension administrator falls under Michigan jurisdiction?
your pension administrator.
What if my pension
administrator does not fall under Michigan jurisdiction?
pension administrator does not fall under Michigan jurisdiction, you may
request to have tax withheld, but the company is not required to do so. If
no taxes are withheld from your payments, it is likely you will be
required to make estimated payments in place of the withholding. For more
information on estimated payments, see MI 1040ES.
If I am in the age
bracket of 1946-1952, will my pension administrator know that the first
$20,000 or $40,000 of my pension is not taxable?
way your pension administrator will know not to withhold on the first
$20,000 or $40,000 of your pension is by receiving your completed
W-4P. You will need to indicate your marital status and
check box 3.
At what rate will my
pension be taxed?
rate for 2012 remains at 4.35%.
If I take an early
distribution, does the new pension law apply to me?
distributions are not considered retirement benefits under Michigan law
and do not qualify for a pension subtraction.
What if I am married
and my spouse was born before 1946 and I was born after 1946. Can I
still subtract the full amount of my pension, or am I limited to the
$40,000 maximum amount for joint returns?
returns, the birth date of the oldest spouse is used to determine the
pension subtraction, regardless of which spouse actually receives the
pension. For example, if one spouse was born before 1946, the pension can
be subtracted under the old rules. Similarly, if the older spouse was born
in 1946 through 1952, the pension could be subtracted up to a maximum of
$40,000, even if the spouse who actually receives the pension was born