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winktax, Enrolled Agent
Category: Tax
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Experience:  18 years experience as an Enrolled Agent, insurance agent, stock broker and financial advisor.
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Can the Michigan NOL carryforward be used to reduce household

Resolved Question:

Can the Michigan NOL carryforward be used to reduce household income for the property tax credit?

Submitted: 5 years ago.
Category: Tax
Expert:  winktax replied 5 years ago.

winktax :

Yes a Michigan NOL can be used on MI Form 1040CR. However you must have a corresponding f ederal NOL and the MI NOL is limited to your household income. ie. NOL is 50,000, household income is 45,000 Max usable NOL is 45,000

winktax :

Per the instructions on MI Form 1045 :To determine household income for purposes of computing the
homestead property tax credit, the home heating credit, and the
farmland preservation tax credit, an NOLD is allowed. The amount
of the NOLD that is allowed cannot exceed your FMTI in the year
to which it is being carried back or carried forward. Claim the
amount of the allowed NOLD on the “other adjustments line” on
the appropriate credit forms for each applicable year. Caution:
To deduct an NOLD from household income, you must have a
corresponding federal NOLD. If you have a Michigan NOLD,
but no federal NOLD, you cannot take an NOLD in household
income. Income and losses from other states, income and losses
from oil and gas production, and federal itemized deductions, must
be considered when calculating the NOL and NOLDs used for
household income. The amount of the allowable NOLD for use in
household income is calculated on page 3 of the MI-1045 form for
both carrybacks and carryforwards. The amount of the carryback
deduction will be the smaller of lines 46 or 47, and the amount of
the carryforward deduction will be the smaller of lines 46 or 52.
Example: Your 2004 FMTI is $20,000, and your 2004 federal
NOLD is $50,000. The amount of the 2004 NOLD of $50,000 that
may be used in 2004 household income is limited to $20,000. The
balance of $30,000 will be available for use in 2005 to the extent
of your 2005 FMTI.

winktax :

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