Form 777 Draft - Michigan Resident Credit For Tax Imposed By A Canadian Province - 2012 Page 2
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2Instructions for Form 777
2012 777, Page 2
Resident Credit for Tax Imposed by a Canadian Province
Before you start, you will need your U.S. Form 1040, all
Conversion Rate
U.S. 1116 forms, Canadian Federal Individual Income Tax
The conversion rate used on this form for the 2012 tax year
Return and Canadian form T-4. Attach copies of all of these
is the conversion rate of XX (XX).
forms to your MI-1040 return.
If you used a conversion rate on your U.S. Form 1116 other
Who May Claim This Credit
than XX%, substitute the rate you used in Part 1 of this
To qualify for a credit using this form, you must:
form.
•
Be a Michigan resident or part-year Michigan
Line-by-Line Instructions
resident,
Lines not listed are explained on the form.
•
Have income that was subject to income tax by both
Line 1: Enter your Canadian income taxable by Michigan.
Michigan and a Canadian province, and
This includes, but is not limited to, salaries, wages,
•
File a Canadian return which shows provincial tax
commissions and other employment income.
paid.
Part-year residents: This line must be only the portion of
Note: The surtax for individuals who are not residents of
income earned as a Michigan resident.
Canada may not be used to compute a Michigan tax credit.
Line 2: If box 14 of Canadian T-4 includes fringe benefits
If your Canadian return submitted with your MI-1040
that are also included in U.S. adjusted gross income (AGI),
return does not show provincial tax, you do not qualify for
reduce the amount in box 14 by the amount included in
a Michigan tax credit.
AGI on your U.S. Form 1040. Note: This reduction must be
Credit Computation
accompanied by verification from your employer.
The maximum credit for tax imposed by a Canadian
Line 12: Enter contributions to a Canadian Pension Plan
province is the smaller of:
from boxes 16 and 17 on the Canadian T-4 (maximum of
•
Michigan tax due on the Canadian income, or
$XXXX.XX) or from line 421 of the Canadian return.
•
The provincial tax you did not claim for credit on your
Part-year residents must prorate the amount on this line.
U.S. Form 1040.
Divide Canadian salaries and wages earned as a Michigan
resident by total Canadian salaries and wages earned. Then
Credit is not allowed for:
multiply the total contribution from boxes 16 and 17 by the
•
Canadian provincial tax unused in prior years but
resulting percentage.
carried over to your 2012 U.S. Form 1116.
Line 13: Multiply line 12 by XX (XX) and enter the result.
•
Canadian provincial tax unused in 2012 and claimed as
a carryover deduction to future years.
Line 15: Enter your Canadian income from line 4.
•
Taxes paid on income subtracted on line 13 of your
Note: Interest and dividends from Canada received by a
MI-1040 (i.e. rental or business income from another
Michigan resident are taxable by Michigan as Michigan
state or Canada, part-year resident wages, etc.).
source income.
If you reduce your U.S. income tax by a carryover of
Line 29a: Enter the portion of the foreign tax credit
provincial tax, you must amend your prior year Michigan
attributable to Canada you claimed on your U.S. Form
income tax return to reduce the credit computed on that
1040, line 47. Your credit amount must be reduced by any
year’s return.
carryover of unused provincial tax included on any U.S.
Form 1116. Your credit amount must also be reduced by any
unused provincial tax that is being carried forward to reduce
federal taxes in future years.
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