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MI Homestead Credit minimum months rented requirement

taxfiler_123

Using FreetaxUsa, I entered my renter's information regarding the Michigan Homestead Credit. I only rented for 5 months at $1295 per month, but the software says I qualify for a credit. According to the MI Homestead guidelines, I thought I had to rent for at least 6 months of the year?

Can someone clarify this for me?

Thank you!

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Michigan Homestead Credit

Accepted answers

MatthewD

Hello,

We looked into your request in detail and believe our calculations are correct, based on the MI Form 1040CR instructions. Here is what the instructions state:

"You may claim a property tax credit if all of the following
apply:
• Your homestead is located in Michigan
• You were a Michigan resident at least six months of 2023
• You own your Michigan homestead and property taxes
were levied in 2023, or you paid rent under a rental contract."

For details see this link to the Form MI-1040CR Instructions.

We do recognize that the website instructions are worded a little differently, but the form instructions are the ones we must stick with.

Thanks again.

taxfiler_123

Awesome, thank you for looking into this—I appreciate it!

All comments

MatthewD

Hi TaxFiler,

Thank you for bringing this to our attention. The Michigan instructions state the following about the amount of time you rented, "You own or were contracted to pay rent and occupied a Michigan homestead for at least 6 months during the year on which property taxes and/or service fees were levied. If you own your home, your taxable value was $154,400 or less (unless unoccupied farmland)"

So, it is possible the software is calculating the homestead credit incorrectly. Will you please contact Support from your FreeTaxUSA tax account, report the problem and ask them to assign the issue to Matthew? I am a Tax Pro here at FreeTaxUSA and will make sure this possible bug gets reported and corrected. Thanks!

taxfiler_123

Thanks for getting back. Ok, I am about to submit a request. About how long should it take to be resolved?

On the MI-1040CR document, under "Part-year Residents" on page 28 (p.4 of the pdf), I also came across the following:

"If you lived in Michigan at least six months during the year,
you may be entitled to a partial credit. If you are a part-year
resident, you must include all income received as a Michigan
resident in total household resources (line 33). Complete
MI-1040CR, Part 3, to determine the taxes eligible to be
claimed for credit on your Michigan homestead."

https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/2023/2023-IIT-Forms/MI-1040CR-Instructions.pdf?rev=e7eefec8ce2b40bda05c01a336a1aa63&hash=FBD2C6FD1A2DA73C6DA028C75DD65824

I imagine that the regular Michigan instructions of paying 6 months' rent still apply in order to claim the credit. I.e., it is *not* meant to suggest that as long as you live somewhere in MI for 6 months, you can occupy your homestead for less than that and still claim the credit. Is my understanding correct?

Thank you for your help!

KeriC

https://community.freetaxusa.com/discussion/comment/1612#Comment_1612

I believe you have already received a response with a timeline from Customer Support, but just in case you missed it, our team is working on the issue and will reply to you within your account on Monday.

MatthewD

Hello,

We looked into your request in detail and believe our calculations are correct, based on the MI Form 1040CR instructions. Here is what the instructions state:

For details see this link to the Form MI-1040CR Instructions.

We do recognize that the website instructions are worded a little differently, but the form instructions are the ones we must stick with.

Thanks again.

taxfiler_123

Awesome, thank you for looking into this—I appreciate it!