Form 777 Draft - Michigan Resident Credit For Tax Imposed By A Canadian Province - 2013 Page 2
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1
2Instructions for Form 777
2013 777, Page 2
Resident Credit for Tax Imposed by a Canadian Province
You will need your U.S. Form 1040, all U.S. 1116 forms,
Conversion Rate
Canadian Federal Individual Income Tax Return and
The conversion rate used on this form for the 2013 tax year
Canadian form T-4 to complete your Michigan Form 777.
is the conversion rate of 97.09% (0.9709).
Attach copies of all of these 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 97.09%, 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
$2,356.20) 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 2013 U.S. Form 1116.
Line 13: Multiply line 12 by 97.09% (0.9709) and enter
•
Canadian provincial tax unused in 2013 and claimed as
the result.
a carryover deduction to future years.
Line 15: Enter your Canadian income from line 4.
•
Taxes paid on income subtracted on line xx of your
MI-1040 (i.e. rental or business income from another
Note: Interest and dividends from Canada received by a
state or Canada, part-year resident wages, etc.).
Michigan resident are taxable by Michigan as Michigan
source income.
If you reduce your U.S. income tax by a carryover of
provincial tax, you must amend your prior year Michigan
Line 29a: Enter the portion of the foreign tax credit
income tax return to reduce the credit computed on that
attributable to Canada you claimed on your U.S. Form
year’s return.
1040, line xx. Your credit amount must be reduced by any
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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