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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:

  1. Total Household Resources is to be calculated using the income of both spouses even if your filing status is Married Filing Separate. 
  2. If you file a joint federal return, you must file a joint Michigan return.
  3. If you file separate federal returns, you may file separate or joint Michigan returns.
  4. 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.

Example:

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.




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