Married Filing Separate - Pension Recipient (Special Situation)
For those pension recipients that will be filing a Married Filing Separate Michigan return and share a household, the following should be considered:
- Total Household Resources is to be calculated using the income of both spouses even if your filing status is Married Filing Separate.
- If you file a joint federal return, you must file a joint Michigan return.
- If you file separate federal returns, you may file separate or joint Michigan returns.
- This situation will have the biggest impact on those who fall under the 1946-1952 age bracket and are trying to determine if they qualify for the $20,000 or $40,000 pension subtraction.
Husband born 1946 & Wife born 1947 - Married
His pension $30,000
Her pension $16,000
Her wages $60,000
Total Household Resources: $106,000
If the spouses file married filing separate, each would be over the single/married filing separate Total Household Resources limit ($75,000) for the pension subtraction. Neither of them would qualify for the subtraction of the first $20,000 of pension benefits as each would be required to report Total Household Resources of $106,000.
However, the combined Total Household Resources is under the limit of $150,000 if they file a joint return. In this case, by filing a joint return, they will be able to subtract the first $40,000 of their pensions.