Form 777 - Michigan Resident Credit For Tax Imposed By A Canadian Province - 2014 Page 2
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22014 Form 777, Page 2
Instructions for Form 777
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 2014 tax year
Canadian Form T-4 to complete your Michigan Form 777.
is the conversion rate of 90.56% (0.9056).
Attach copies of all of these forms to your MI-1040 return.
If you used a conversion rate on your 2014 U.S. Form 1116
Who May Claim This Credit
other than 90.56%, replace the rate in Part 1 of this form
To qualify for a credit using this form, you must:
with the rate used on your 2014 U.S. Form 1116.
•
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: Compensation reported on this line may
NOTE: The surtax for individuals who are not residents of
include only the portion earned while a Michigan resident.
Canada may not be used to compute a Michigan tax credit.
Line 2: If box 14 of Canadian Form T-4 includes fringe
If your Canadian return submitted with your MI-1040
benefits that are also included in U.S. adjusted gross income
return does not show provincial tax, you do not qualify for
(AGI), reduce the amount in box 14 by the amount included
a Michigan tax credit.
in AGI on your U.S. Form 1040. Note: This reduction must
Credit Computation
be 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 Form T-4 (maximum
•
Michigan tax due on the Canadian income, or
of $2,425.50) 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 2014 U.S. Form 1116.
•
Canadian provincial tax unused in 2014 and claimed as
Line 13: Multiply line 12 by 90.56% (0.9056) and enter
the result.
a carryover deduction to future years.
•
Taxes paid on income subtracted on line 13 of your
Line 15: Enter your Canadian income from line 4.
MI-1040 (e.g., 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
•
Canadian federal tax, contributions to Canadian Pension
source income.
Plan, or taxes paid to any other foreign country or
Line 29a: Enter the portion of the U.S. foreign tax credit
subdivision of a foreign country, other than a province
taken on U.S. Form 1040, line 47 that is based on Canadian
of Canada.
federal tax, Canadian provincial tax, and contributions
to Canadian Pension Plan paid or accrued in 2014. The
NOTE: If you reduce your U.S. income tax by a carryover
amount entered must not include the portion of the U.S.
of provincial tax, you must amend your prior year Michigan
credit attributable to carryover of prior year tax and must
income tax return to reduce the credit computed on that
not include Canadian taxes carried over to a year after
year’s return.
2014. In computing the U.S. credit, it is presumed that the
Canadian federal income tax is claimed first.
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