Michigan Schedule 1 Line 1

Forum|Forum|2 years ago
March 25, 2024
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There is a number that is being populated in line 1 on Schedule 1 of the Michigan return does not match any numbers on my return or any sum of numbers. In trying to resolve the issue, I switched from "EasyStep" to "Forms" and found the number is pre-populated with no worksheet. It is unclear how TurboTax is calculating the number. You cannot right click using the cursor pointer over the entry.

I understand the Michigan directions which tell you to input gross interest and dividends from obligations issued by states other than Michigan. I think I know my numbers. The problem is my numbers don't match what Turbotax has input, and I cannot change it. So, can someone give the exact forms and lines where information is pulled from to calculate line 1? Or give us the ability to change that number?

I have been on the phone for over an hour already talking with "support". They cannot contribute any information or see the "forms" section in question when sharing screens so they weren't able to help. I've paid $45 for the states version so it would be nice if I could get some answers. I think it is a software glitch and I don't want to pay additional tax on a number that I cannot support. Who can help?

Best answer by AnnetteB6

Following up on this post as I think it contains some misinformation regarding the line tax exempt interest is reported on the 1099-DIV. It should be line 12, not line 11. Correct, @AmyC ?

Therefore, Michigan Schedule 1 Line 1 should be the addition of:

1099 Interest Line 8 minus Michigan portion of interest

1099 Dividend Line 12 minus Michigan portion of interest

K1 Tax Exempt Interest line 14 code A minus Michigan portion of interest

Less:

Adjustments such as bond premiums listed on Line 13 of 1099-INT

As mentioned by LITalum, if Turbotax is assuming a standard percentage bond premium instead of the actual percentage, a person could be overpaying taxes to Michigan. To correct this, you would have to falsify information input to the Federal questionnaire in order to get TurboTax to put the right number on Michigan's Schedule 1 Line 1 because TurboTax does NOT provide a worksheet for Michigan Schedule 1, or any other way to change the number. This is a programming error and should be corrected.

Based on the Michigan Instructions for Schedule 1, Line 1 is calculated as follows:

Line 1: Residents enter nonbusiness gross interest, dividends, and income from obligations or securities of states and their political subdivisions other than Michigan. Residents and nonresidents report non-Michigan municipal business income from a partnership, S corporation, estate, or trust with Michigan business activity. Business income subject to apportionment must be included on the
Michigan Schedule of Apportionment (MI-1040H). You may reduce this income by related expenses not allowed as a deduction by Section 265(a)(1) of the Internal Revenue Code (IRC).

For your particular case using information from your token file, here is the calculation for Line 1:

Total tax-exempt interest reported on Form 1099-INT, box 8: 31,775 (all states including MI)

Tax-exempt interest reported on Form 1099-INT, box 8 attributed to MI: 10,750 (33.832% of the total)

Tax-exempt interest reported on Form 1099-INT, box 8 attributed to states other than MI: 21,025 (66.168% of the total)

Total bond premium reported on Form 1099-INT, box 13: 14,580.52

Bond premium attributed to states other than MI: (14,580.52 X 0.66168) = 9647.64

Total tax-exempt OID reported on Form 1099-OID attributed to IN: 1459.47

Total exempt-interest dividends reported on Form 1099-DIV box 12: 8939.24

Exempt-interest dividends reported on Form 1099-DIV box 12 attributed to MI: 80.84

Exempt-interest dividends reported on Form 1099-DIV box 12 attributed to states other than MI: 8858.40

Total tax-exempt interest income reported on K-1 Trust, box 14 code A: 223

Total tax-exempt interest income reported on K-1 Trust, box 14 code A attributed to MI: 12

Total tax-exempt interest income reported on K-1 Trust, box 14 code A attributed to states other than MI: 211

Using the underlined values:

Line 1 = 21,025 + 1459.47 + 8858.40 + 211 - 9647.64 = 21,906.23 ... rounded to 21,906

@sgs112

LeticiaF1

TurboTax transfers data from your federal return to your state return. If the info in your federal return is incomplete or incorrect, your state return won't be complete or correct either.

Go back through your federal return (starting at the Personal Info tab) and make sure everything's correct.

Once you're done, select the State Taxes tab and review the state section. Pay close attention to the info, especially if you made changes to your federal return. There might be new sections that need to be completed.

Sometimes changes made to your federal return won't transfer if you override info in your state return. If this happens, delete your state return and start over.

Please contact us again if your issue continues.

sgs112Author

Let me be very specific...can I get the exact form and/or lines from the Federal return where TurboTax is pulling information to input or calculate line 1 of Michigan Schedule 1?

This line adds income to the Michigan tax return, which is then taxed. It is not sufficient to simply "hope" Turbotax has the correct number, ESPECIALLY WHEN it is know that sometimes changes made to the federal return cause issues in the transfer to the state return. If TurboTax can tell us how line 1 is calculated, then it is easy to go back to check if it is accurate.

Again, I've spent over an hour on the phone with support who are unhelpful. Just need someone to give directions on where that number is coming from. If not, consider it a programming error and allow users to change the number on the form instead of locking it in.

Help still needed!

Getsmarts

I am having the same issue. My number for MI Schedule 1 Line 1 is $2,081 but cannot figure out where TurboTax got that info from. To complicate things I need to Annulize my income for the four periods to reduce or eliminate my underpayment penelty (even while getting a refund).

LITalum

Yes, there is an error in the way Turbo Tax computes Michigan Sch 1, line 1. TT oversimplifies this input (you don't have a way to input it on Mich inputs, it automatically populates based on Fed 1099-INT/DIV inputs). In my case, I had Tax Exempt interest from Muni Bonds. Using round numbers here, $50k Tax Exempt interest and $25k for Bond Premium for a final tax free $25k tax exempt int on FED 1040 line 2a. An average 50% Bond Premiumfor all tax exempt bond interest, Michigan and otherwise. In my case, my Michigan Bond Premium was only 30%, which (see your year end report). TT uses the overall average of 50%. So 50% was subtracted from the Michigan only interest instead of 30% to determine the net non-Michigan Tax Exempt interest for auto entry for Mich Sch 1, Line 1. The net (gross) non-Michigan number for this input that is too high and resulting in a higher Michigan tax. The simple way around is to artificially adjust your Michigan Tax Exempt interest portion upwards on the FED taxes until Sch 1 Line 1 matches the number it actually is. All this info is in your year end summary that is not reported to the IRS. You need to keep detailed notes of what you did in your tax records that will be easily explained to any auditor if that happens. Turbo tax should allow for you to use your year end summary data supplied on your 1099 to input info into Michigan Sch 1 for this. I assume it was oversimplified by TT to make things easy to produce TT software. There is a manual way to override TT inputs, I just forgot how. Will dig it up.