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News & Events Digest: December 2023





Michigan Earned Income Tax Credit
Gov.?Whitmer?Announces Earned Income Tax Credit for Working Families Checks will be Sent in Early 2024

Governor Gretchen Whitmer recently announced that Michigan families will receive Michigan Earned Income Tax Credit (Michigan EITC) for Working Families checks ahead of schedule, beginning February 13, 2024. The administration is taking steps to send the checks to more than 700,000 Michigan households, putting an average of $550 back into Michiganders? pockets.

*What is the Michigan EITC?*

Beginning February 13, 2024, the Whitmer Administration will mail checks to Michigan families who qualified for the Michigan EITC as a part of their 2022 tax return. The checks will be the difference between the 6% tax credit Michiganders received on their tax return and the 30% that is owed to the under the new law. Based on data from last year?s returns, Michiganders should expect to receive an additional $550 on average.?

In March, Governor Whitmer signed legislation quintupling the Michigan EITC match of the federal Earned Income Tax Credit to 30%, up from 6%. This expansion will deliver an average combined tax refund of $3,150 to 700,000 families, directly impacting nearly one million kids ? almost half the kids in Michigan.?

*Why are Michiganders Receiving Additional Checks?*

While the legislation?was?intended to?provide Michiganders with the?tax?credit?earlier this year, some lawmakers blocked a procedural vote, delaying?the?tax?credit?for a full year. As a result, the?Whitmer?Administration?retained the funding to begin distributing when the law fully takes effect on February 13, 2024, meaning Michiganders will get the money that was owed to them.

Additionally, eligible Michiganders should still apply for the expanded tax credit if they meet the criteria this year. It is possible for Michiganders to receive both the additional Michigan EITC check from their 2022 tax return and also receive the full 30% tax credit on their 2023 tax filing when they file next year.?

*How do Michiganders Receive their Check?*

The Michigan Department of Treasury will automatically process checks for Michiganders who submitted their 2022?tax?return and confirmed eligibility for the additional state?credit. Checks will be mailed on a rolling basis as soon as they are printed. It is estimated to take?between five to six weeks to?print and distribute all payments.

Eligible Michiganders do not need to submit any additional paperwork to receive the?tax?credit.?However, if an individual has moved frequently or recently and has concerns about their address accuracy, Michiganders can manually update it online [ [link removed] ].

*About the Michigan ETIC*

The Michigan EITC is a?tax?benefit for?working?individuals with income below a certain level.?The Michigan EITC?provides?a?tax?credit?up to $2,080 for?tax?year?2022 and $2,229 for?tax?year 2023.The?eligible?credit?amount depends on several factors ? including your income, filing status, number of ?qualifying children,? and disability?status.

Additional information about the Michigan EITC can be found on Treasury's website. [ [link removed] ]



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Mailbox
Make Sure Addresses Are Updated Before the 2024 Income Tax Filing Season

Taxpayers are encouraged to check with current and previous employers and financial institutions to ensure they have up-to-date addresses on file in preparation for the 2024 income tax filing season.

By ensuring employers and financial institutions have the latest address information on file, W-2s and other financial documents can be mailed to the correct address. Incorrect addresses typically lead to information being mailed to the wrong location and could cause delays when filing tax returns.

?Updating your address with current and past employers and financial institutions can help prevent any unnecessary processing delays when you file your income taxes next year," said Deputy State Treasurer Glenn White, who oversees Treasury's Revenue Services programs. "When the individual income tax processing season opens in late January, we will be ready to process your return. A few moments of your time today can make filing much easier tomorrow."

Other notable items for Michigan's 2024 individual income tax filing season (2023 tax year):


* Beginning in January 2024, forms and instructions may be viewed and downloaded from?www.michigan.gov/taxes [ [link removed] ]. In addition, commonly used forms will continue to be available at Treasury offices, public libraries, northern Michigan post offices and Michigan Department of Health and Human Services county offices.?
* When tax season begins in late January, taxpayers are encouraged to e-file their state tax returns instead of mailing a paper return. To learn more, go to?www.mifastfile.org [ [link removed] ].
* Taxpayers who have been recent victims of identity theft are asked to?report their circumstances to the state Treasury Department [ [link removed] ]. Reporting identity theft helps thwart cybercriminals who attempt to file returns and steal state tax refunds. To learn more about tax-related identity theft, go to?www.michigan.gov/identitytheft [ [link removed] ].?
* Michigan?s 2023 tax return, forms, and instructions (e-file and paper format) reflect the expanded Michigan Earned Income Tax Credit (ETIC) for Working Families created in a new state law. Although the law will not take effect until February 13, 2024, Michigan EITC-eligible individuals should not delay in filing their?tax year 2023 return and claiming the expanded credit [ [link removed] ]. Treasury will work affected returns as they are received and prepare them for release as soon as the law takes effect.
* The?Lowering MI Costs Plan provides taxpayers with more options to choose the best taxing situation for their retirement benefits [ [link removed] ]?beginning in tax year 2023. The law change will take effect on February 13, 2024. Treasury is committed to ensuring that all eligible retirees can take full advantage of the expanded subtraction options. Michigan?s 2023 tax return, forms, and instructions (e-file and paper format) incorporate all retirement and pension benefit subtraction options, including those created in the new law.

For the 2023 filing season, the state Treasury Department processed nearly 5.2 million 2022 tax year individual income tax returns, with a typical refund around $760. Most timely filed refunds for the 2022 tax year have been processed.

*Questions?
*

Although individual income tax return processing will be suspended until early next year, taxpayers can continue to ask questions through?Treasury eServices [ [link removed] ]. The online platform enables taxpayers to ask state income tax-related questions when convenient.

To get started with Treasury eServices, go to?www.michigan.gov/incometax [ [link removed] ]?and click on "IIT eService [ [link removed] ]."



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Treasury Talk Podcast

Guest host Ron Leix and Treasury Outreach Manager Sarah Rusnell discuss what Individual Income Tax AND Business Tax filers need to know for the upcoming 2024 tax season! [ [link removed] ]



Medicaid Reminder

New Year's Resolution: Remember to complete your Medicaid renewal and return your paperwork so your family stays covered with eligible benefits. [ [link removed] ]






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System Maintenance
Annual State Individual Income Tax System Maintenance Underway

System maintenance is underway in preparation for the 2024 individual income tax filing season.

On Friday, December 8, the state Treasury Department suspended processing state individual income tax returns due to tax systems being converted for the upcoming 2024 tax filing season. Individuals will be able to file and check the status of returns and receive refunds after January 8, 2024.

Most timely filed refunds for tax year 2022 have been processed.

"I want to thank taxpayers for their patience as we conduct our annual system maintenance in preparation for the 2024 individual income tax filing season," said Deputy State Treasurer Glenn White, who oversees the state Treasury Department's Revenue Services programs. "The processing of tax returns and issuing of refunds will resume in early January. We look forward to serving taxpayers in the new year."

At the close of each calendar year, the Michigan Department of Treasury undergoes system maintenance in preparation for the upcoming individual income tax filing season. The Internal Revenue Service and other states have similar end-of-the-year maintenance schedules.



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Detroit
REMINDER:?City of Detroit Withholding Tax to Be Paid Monthly in 2024

City of Detroit employers who withhold wages in compliance with the City Income Tax of 1964 will see some new changes beginning in 2024.

Effective January 1, 2024, employers will be required to file and pay their City Withholding Tax monthly. State law requires that a withholding employer in any city where the Michigan Department of Treasury (Treasury) administers taxes must file a return and pay the tax withheld for each calendar month by the end of the 15th?day of the following month.

Due to this requirement, city of Detroit employers will be required to submit their monthly payments to Treasury electronically beginning in 2024. Treasury is working to implement an electronic payment system that will accept debit and credit cards or Automated Clearing House (ACH) or Electronic Fund Transfer (EFT) payments.

Debit and credit card payments will have a service fee, while ACH or EFT payments will not. Taxpayers interested in using a fee-free EFT payment method must submit a City of Detroit Electronic Funds Transfer Debit Applications, Account Update (Form 5473), which will be available by December 31, 2023.

In addition, state law requires employers to file an annual City of Detroit Income Withholding Reconciliation (Form 5321) before February 28 of the immediately following calendar year.

City Withholding Tax forms and documents will be updated to reflect the new monthly filings. The forms will only be available online or through applicable software vendors. Paper forms and booklets will no longer be printed and mailed to employers.

The option to file and pay quarterly will no longer be available.

Additional updates and updated tax forms will be provided in the coming months. Questions should be directed [email protected]?or call 517-636-5829.

Currently, there are 24 Michigan cities with municipality tax related to income; these can be business taxes (i.e., withholding or corporate income) or individual income tax. Apart from the city of Detroit, each city administers their own taxes, including filing and payment requirements. The Michigan Department of Treasury administers city of Detroit income, withholding and corporate income taxes.

VIDEO:?City of Detroit Withholding Tax to Be Paid Monthly in 2024 [ [link removed] ]



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Fostering Futures Scholarship Trust Fund logo
Consider Opening Hearts (and Wallets) to Help Students Leaving the Foster Care?

As the end of the year draws near, the Michigan Department of Treasury is encouraging Michiganders to consider giving the gift of education through a tax-deductible donation to help youth who have experienced foster care.

?A growing number of our youth are reaching adult age and leaving the foster care system with inadequate resources to attend college,? said?*Robin Lott*, executive director of the Office of Postsecondary Financial Planning. ?We know that Michiganders have big hearts that will grow even bigger as we raise funds for Michigan?s foster youth.?

Students who receive this scholarship can use the money for tuition, housing, books and other college expenses.

Funds raised through the?Fostering Futures Scholarship Trust Fund [ [link removed] ]?provide scholarships to young adults who have experienced foster care and are enrolled at a Michigan degree-granting college or university. Awards are paid to the students? college or university for expenses.

More than 10,000 youth are in the Michigan foster care system run by Michigan Department of Health and Human Services. Fewer than 10% of former foster youth nationally enroll in school after high school and fewer than 3% eventually earn a degree.

Since 2012, fundraising efforts have totaled approximately $1.3 million, all of which has been awarded as scholarships. This was accomplished through individual donations, group donations, sponsorships, ticket sales, auctions and many volunteer-based fundraising events.

Contributing online is quick, easy and secure and available 24 hours a day, 7 days a week. [ [link removed] ]



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Treasury Update Banner
Treasury Issues November 2023 Edition of "Treasury Update"

The Michigan Department of Treasury's Tax Policy Division recently published its November 2023 edition of "Treasury Update." This quarterly publication provides the latest insight from the department's legal lens.

Issues covered this quarter include:


* Flow-through entity tax reporting updates.
* Legislature enacts 75% "prepared food" standard.
* Recently issued guidance from Treasury.
* Check the box! It's now easier for taxpayers to help save lives.
* Court of Claims upholds sales tax audit of dental laboratory.
* U.S. Supreme Court will not hear Michigan apportionment case.
* Court of Appeals clarifies "research or experimental activities" under the industrial processing exemption.

Read this quarter's "Treasury Update" online. [ [link removed] ]



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Facts and Figures
Inflation-Adjusted Motor Fuel Tax Rate Will Take Effect on January 1, 2024

Pursuant to MCL 207.1008, the Michigan Department of Treasury shall calculate the motor fuel tax rate. Under the law, the Calendar Year (CY) 2024 motor fuel tax rate is calculated by taking the CY 2022 motor fuel tax rate and adjusting by the lesser of the FY 2023 U.S. inflation rate or five percent.

Using the definition of inflation rate in MCL 207.1003(3)(l), the inflation rate for the CY 2023 calculation is calculated as follows: (1) The average of the 12 monthly values for October 2021 through September 2022; (2) The average of the 12 monthly values for October 2022 through September 2023; (3) The ratio of (2) divided by (1) minus one is calculated to arrive at the percent change.

Based on data released through October 12, 2023, by the United States Department of Labor, the inflation rate for the fiscal year ending September 30, 2023, as measured by the U.S. CPI for all urban consumers, is a 5.1 percent increase.

Therefore, the CY 2024 motor fuel tax rate equals the CY 2023 motor fuel tax rate of 28.6 cents increased by 5.0 percent: 28.6 cents per gallon x 1.05 = 30.0 cents per gallon.

Under MCL 207.1008, the motor fuel tax rate that will be in effect on January 1, 2024, is 30.0 cents per gallon.

Read the official notice from December 1, 2023, on Treasury's website. [ [link removed] ]



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This email was sent to [email protected] using GovDelivery Communications Cloud on behalf of: Michigan Department of Treasury ? Lansing, MI 48922 ? 517-335-7508
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