Michigan Tax Form MI-1040CR-7 - Michigan Home Heating Credit Claim Instructions

Important Information for All Claimants

This booklet contains forms and instructions on how to file and calculate your home heating credit. Please read these instructions carefully. The request for your Social Security number(s) is authorized under United States Code (USC) Section 42. Social Security numbers are used by Treasury to conduct matches against benefit income provided by the Social Security Administration and other sources to verify the accuracy of the home heating and property tax credit claims filed and to deter fraudulent filing(s).

If you currently receive Family Independence Program (FIP) assistance or other public assistance, you may claim a home heating credit if you owned or rented a homestead in 2009. If you owned or rented only part of the year, you must prorate your credit. See instructions for a part-year owner or renter on page 5.

If you receive FIP assistance, State Disability Assistance (SDA), or you are enrolled with the DHS for direct payment, by law Treasury must send your credit directly to your heat provider.

If your heat is provided by DTE Energy, Consumers Energy, or SEMCO Gas, your home heating credit may be sent directly to your heat provider. (See instructions for line 43, page 8.)

If, at the time you file this claim, your heating costs are included in your rent or your heat service is in someone else's name, your credit must be reduced by 50 percent. Your credit will be issued as a check, rather than an energy draft (see lines 5 and 35 of MI-1040CR-7).

If you file an income tax return (MI-1040), do not staple your home heating credit claim to MI-1040. Instead, fold it and leave it loose in the envelope. You cannot apply your home heating credit to your income tax liability.

If you file a property tax credit claim (Michigan Homestead Property Tax Credit Claim (MI-1040CR) or Michigan Homestead Property Tax Credit for Veterans and Blind People (MI-1040CR-2)) without an MI-1040, you should include your home heating credit claim with the property tax credit claim form.

IMPORTANT: Keep a copy of your return and all schedules for six years.

Who May Claim a Credit

This credit helps low income families pay their home heating costs. To see if you may claim a credit, answer the following questions:

  • Are you a full-time student who is claimed as a dependent on another person's income tax return?
  • Did you live in a licensed care facility for the entire year? (See "Licensed Care Facilities" on page 5.) If you answered yes to either of these questions, you cannot claim a home heating credit. If you answered no to both questions, you may claim a credit if:
  • Your homestead is in Michigan
  • You own or rent the home where you live
  • You DO NOT live in college or university-operated housing (including dormitories, residence halls, or apartments)
  • Your income is within the income limits listed in Tables A and B on page 15.

You can have only one homestead at a time and you must be the occupant as well as the owner or renter. Your homestead can be a rented apartment or a mobile home on a lot in a mobile home park. A vacation home or income property is not considered your homestead.

Your homestead is in your state of domicile. Domicile is the place where you have your permanent home. It is the place to which you plan to return whenever you go away. Even if you spend the winter in a southern state, your domicile is still Michigan. College students and others whose permanent homes are not in Michigan are not Michigan residents. Domicile continues until you establish a new permanent home.

Spouses who share a home are entitled to only one home heating credit based upon the number of allowable exemptions in the household or the heating costs for the home, and joint household income. If you were separated for all or part of the year and file a joint federal or Michigan income tax return with your spouse, your credit claim is based upon either the heating costs of only one home or the number of exemptions in each household. The household income must be the combined income of both spouses for the entire year. Spouses who maintain separate homes for the entire year and do not file joint federal or Michigan income tax returns may each claim a credit based upon their separate heating costs or exemptions and household income. If you were separated or divorced during 2009 and do not file joint income tax returns, your credit must be based on your share of the heating cost or exemptions before separation, plus your exemptions and individual heating costs after separation. Attach a schedule showing your computation.

Note: You cannot file a home heating credit claim for any prior tax year.

When to File

File your home heating credit claim as soon as you know your household income for 2009. File before April 15, 2010, to receive priority in processing.

The final date for filing a 2009 home heating credit is September 30, 2010. (Your claim must be postmarked by September 30, 2010.) The filing of an extension for income taxes does not extend the due date for the home heating credit.

Exemptions. You may claim one exemption for each of the following:

  • Yourself, unless you are eligible to be claimed as a dependent on someone else's return
  • Your spouse
  • Your children who live with you, even if their support comes from FIP assistance or someone else. If you do not have custody of your children, you cannot claim them on your MI-1040CR-7, even if you can claim them on your MI-1040.
  • Any other dependent who lives with you and for whom you provided more than half their support.

You can claim additional exemptions for each special condition that applies to you, your spouse, or your dependents. If one spouse qualifies, claim 1; if both qualify, claim 2. Special exemptions are for age (65 or older), deaf, disabled or blind, and qualified disabled veteran. If either you or your spouse receives unemployment compensation greater than 50 percent of your combined federal AGI, you may claim one additional exemption. See instructions for line 11 on page 6.

Deceased Claimants

The alternate heating credit may not be claimed by a personal representative. If your spouse died in 2009, use the same number of exemptions you would have used had your spouse lived all year.

The surviving spouse may file a joint return for 2009. Write your name and the deceased's name and both Social Security numbers on the MI-1040CR-7. Write "DECD" after the deceased's name.

You must report the deceased's income. Sign the return. In the deceased's signature block, write "Filing as surviving spouse." Enter the deceased's date of death in the "Deceased Taxpayers" box on the bottom of page 2.

If filing as the claimant for the refund of a deceased taxpayer, you must attach U.S. Form 1310 or Michigan Claim for Refund Due a Deceased Taxpayer (MI-1310). Enter the deceased's name in the Filer's Name fields and your name in the Spouse's Name fields as follows:

John Brown, DECD
Jane Brown, Claimant

For claimants who died in 2009, the standard allowance must be used and prorated to the date of death as noted in the following paragraph.

If filing as a personal representative who files a claim for a deceased person, you must use the standard allowance and prorate for the number of days from January 1 until the date of death. Follow the directions on page 5 for prorating the credit for a part-year owner or renter. Enter the deceased's name in the Filer's Name fields and your name in the Spouse's Name fields as follows:

John Brown, Est. of
Jane Brown, Rep.

Use the deceased's Social Security number and your address. Enter the date of death in the "Deceased Taxpayers" box on the bottom of page 2 of the form.

Household Income

Household income is the total income (taxable and nontaxable) of both spouses or of a single person maintaining a household. It is your AGI, plus all income exempt or excluded from AGI. Include gains realized on the sale of your residence regardless of your age or whether or not these gains are exempt from federal income tax. (See instructions beginning on page 6.) All unemployment (taxable and non-taxable) and forgiveness of debt must be included.

Household income does NOT include:

  • Economic recovery payments from the Social Security Administration or the Department of Veterans Affairs
  • Recovery rebate credits claimed on 2008 federal tax return
  • Payments received by participants in the foster grandparent or senior companion program
  • Energy assistance grants
  • Government payments to a third party (e.g., a doctor)

Note: If payment is made from money withheld from your benefit, the payment is part of household income. (For example, the DHS may pay your rent directly to the landlord.)

  • Money received from a government unit to repair or improve your homestead
  • Surplus food or food assistance program benefits
  • State and city income tax refunds and homestead property tax credits
  • Chore service payments (these payments are income to the provider of the service)
  • The first $300 from gambling, bingo, lottery, awards, or prizes
  • The first $300 in gifts, cash, or expenses paid on your behalf by a family member or friend
  • Amounts deducted from Social Security or Railroad Retirement benefits for Medicare premiums
  • Life, health, and accident insurance premiums paid by your employer.
  • Loan proceeds
  • Inheritance from a spouse
  • life insurance benefits from a spouse
  • Payments from a long-term care policy made to a nursing home or other care facility.

Special Provisions for Farmers

If you received a farmland preservation tax credit in 2009, you must include it in household income. You may subtract the business portion of your homestead property tax credit if you included it in taxable farm income.

Licensed Care Facilities

If you live in a licensed care facility, generally you do not qualify for the home heating credit. Licensed care facilities include adult foster care homes, licensed homes for the aged, nursing homes, and substance abuse treatment centers. If you lived in a licensed care facility only part of the year, you could qualify for a partial credit for the period you lived outside the facility. (See prorating instructions for a part-year owner or renter on this page.)

If your spouse lives in a licensed care facility and you live in the family homestead, you may still qualify for a credit. File a joint credit claim and DO NOT check a box on line 10.

Subsidized senior citizen apartments are not licensed care facilities. If you live in a subsidized senior citizen apartment, you may apply for a credit.

Standard Credit

The standard credit computation uses standard allowances established by law. Use Table A on page 15 to find the standard allowance for the number of exemptions you claimed.

Shared Housing Standard Allowance. If you share a home but are not the owner or you do not have a contract to pay rent, you cannot claim a credit.

When two or more single people share a home, each may claim a credit if each has contracted to pay rent or owns a share of the home. Each should file a home heating credit based on his or her household income and his or her share of the standard allowance. First, determine the standard allowance from Table A on page 15 by adding the personal exemptions of all the claimants sharing a home. Divide this standard allowance by the number of claimants in the home.

Example: Three men share an apartment. Each has a signed lease and pays 1/3 of the rent. The standard allowance for three exemptions is $706. Each person must use a standard allowance of $235 ($706 ÷ 3 = $235) to compute his credit.

If you are eligible for a special exemption, compute your standard allowance following this example:

Example: Emma and Ruth share a home. Emma is age 59 and Ruth is age 65. They file separate MI-1040CR-7 claims. They must first divide $562 (the standard allowance for two exemptions) by 2. Emma's allowance is $281. Because Ruth qualifies for a special exemption for age, she may add the difference between the standard allowance for three ($706) and the standard allowance for two ($562) to $281.

$706 - $562 = $144 + $281 = $425
$425 is the standard allowance for Ruth.

Part-Year or Occupied Homestead Less Than 12 Months. You must prorate your standard allowance for the number of days you owned or rented and occupied your Michigan homestead. For example, you moved to Michigan on September 1. It is 122 days from September 1 to December 31. Divide 122 by 365 days and multiply the result by your standard allowance. Enter the prorated standard allowance on line 32 of your claim.

Alternate Credit

The alternate credit uses heating costs to compute a home heating credit. Add the amounts you were billed for heat from November 1, 2008 through October 31, 2009. See instructions for line 9 on page 6. If you buy bulk fuel (oil, coal, wood, or bottled gas), add your receipts to get your total heating cost. Treasury may request receipts to verify your heating costs. If your claim is for less than 12 months or your heating cost is currently included in your rent, you cannot claim an alternate credit. You may claim heating costs on your Michigan homestead only. You may not claim heating costs on a vacation home or home outside of Michigan.

For assistance in determining the credit for which you may qualify, visit www.michigan.gov/heatingassistance.

Credit Payments

If you are responsible for paying your heating bills, State law requires Treasury to issue your credit in the form of a State of Michigan Energy Draft. You can only use the draft to pay heat bills. Give the draft to your enrolled heat provider who will apply it to current or future heating bills for your home. If the amount of your draft is more than you owe, you may request a refund of the difference by checking the box in the lower-right corner of the draft. Your heat provider has 14 days to pay your refund, without interest.

If you receive a draft and your heat provider is not enrolled in Michigan's energy assistance program, or if you use bulk fuel and have already bought your energy supply for the year, return the draft with a note of explanation to Treasury. Treasury will review your explanation and, if appropriate, reissue your credit in the form of a check.

If you are notified of denial, you have the right to a hearing.

If you receive FIP assistance or other DHS benefits or you are enrolled with DHS for direct payment, the law requires your credit be sent directly to your heat provider, who will then apply it to your account.

If your heat is provided by DTE Energy, Consumers Energy, or SEMCO Gas, your home heating credit may be sent directly to your heat provider. (See instructions for line 43 on page 8.)

Line-by-Line Instructions for MI-1040CR-7

Lines not listed are explained on the form.

Lines 1, 2 and 3

Enter your name(s), current address, and Social Security number(s). If you are married filing separate claims, enter both Social Security numbers but do not enter your spouse's name.

Line 4

Enter your two-digit county code from the County Code Table on page 15.

Line 5

If you rent and your heat is included in your rent or your heat service is in someone else's name, you must check "Yes" on line 5 and complete line 35 of the form to receive a check. Failure to do so will result in your credit being issued as a draft. You will then have to return the draft with a note of explanation to Treasury. It may take 90 days or more to issue a check to replace the draft.

Line 9

If you checked "Yes" on line 5, skip this line. If you were not a full year Michigan resident and/or were not billed for 12 months' heating costs between November 1, 2008 and October 31, 2009, skip this line. Otherwise, enter the heating costs you were billed from November 1, 2008 to October 31, 2009 on your Michigan homestead. Many fuel companies include the total heating cost for those 12 months on the October bill. If you cannot find your bills or the information is not on your October bill, call your heating company and ask.

Line 10

If you lived in one of the care facilities listed on line 10 for all of 2009, you are not eligible for a home heating credit and should not file this form. If you are married and your spouse lived in a licensed care facility while you lived in your homestead, do not check a box. Also, do not check the "Licensed Home for the Aged" box if you live in subsidized senior citizen housing. See "Licensed Care Facilities" on page 5.

Line 11

Exemptions. Enter the number that applies to you, your spouse, and your dependents as of December 31, 2009.

a) Personal Exemption. Enter "1" if you are a single or married filing separate filer; "2" if you are married filing jointly.

b) Age 65 or older. You are considered age 65 the day before your 65th birthday.

c) Deaf, disabled or blind, qualified disabled veteran. You qualify for the deaf exemption if the primary way you receive messages is through a sense other than hearing (for example, lip reading or sign language).

You qualify for the disabled or blind exemption if you are hemiplegic, paraplegic, quadriplegic, or totally and permanently disabled. Blind means your better eye permanently has 20/200 vision or less with corrective lenses, or your peripheral field of vision is 20 degrees or less. Totally and permanently disabled means disabled as defined under Social Security Guidelines 42 USC 416. If you are age 65 or older, you may not claim an exemption as totally and permanently disabled.

Taxpayers may claim an extra exemption if (a) the taxpayer or spouse is a qualified disabled veteran, or (b) a dependent of the taxpayer is a qualified disabled veteran. To be eligible for the additional exemption an individual must be a veteran of the active military, naval, marine, coast guard, or air service who received an honorable or general discharge and has a disability incurred or aggravated in the line of duty as described in 38 USC 101(16). This additional exemption may not be claimed on more than one tax return.

d) Unemployment compensation. Enter "1" if 50 percent or more of your federal AGI is from unemployment compensation. Your AGI is from your U.S. 1040, 1040A, or 1040EZ.

h) Include children over age 18 who live with you.

Household Income

You must complete lines 13 through 31 on MI-1040CR-7 even if you filed a homestead property tax credit claim (MI-1040CR or MI-1040CR-2). Include income earned by both spouses if you are filing a joint claim. See "Household Income" on page 4. Gains realized on the sale of your residence, regardless of your age, must be included in your household income even if they are not taxable on your federal income tax return.

Line 12

If you claimed exemptions for children or dependent adults other than your spouse on lines 11e through 11h, enter the following information for each person claimed: name, relationship to you, Social Security number, and age in years. For children 12 months and under, enter one year. Attach an additional sheet if more space is needed.

Line 13

Enter all compensation received as an employee. Include strike pay, supplemental unemployment benefits (SUB pay), sick pay, or long-term disability benefits, including income protection insurance and any other amounts reported to you on Form W-2.

Line 15

Enter the total of the amounts from U.S. Schedule C (business income or loss), Form 4797 (other gain or loss), and Schedule E (rents, royalties, partnerships, S corporations, estates, and trusts). Include amounts from sources outside Michigan. Attach these schedules to your claim.

Line 16

Enter all annuity, retirement pension, and individual retirement account (IRA) benefits and the name of the payer. This should be the taxable amount shown on your U.S. Form 1099-R. If no taxable amount is shown on your U.S. Form 1099-R, use the amount required to be included in AGI. Enter zero if all of your distribution is from your contributions made with income previously included in AGI. Include reimbursement payments such as an increase in a pension to pay for Medicare charges. Also include the total amount of any lump sum distribution including amounts reported on your U.S. Form 4972. Do not include recoveries of aftertax contributions or amounts rolled over into another plan (amounts rolled over into a Roth IRA must be included to the extent included in AGI).

You must include any part of a distribution from a Roth IRA that exceeds your total contributions to the Roth IRA regardless of whether this amount is included in AGI. Assume that all contributions to the Roth IRA are withdrawn first. Note: Losses from Roth IRAs cannot be deducted.

Line 17

Enter the amount from U.S. Schedule F (farm income or loss). Attach Schedule F.

Line 18

Enter net capital gains and losses. This is the total of short- and long-term gains, less short- and long-term losses from your U.S. Schedule 1040D, line 16 (for gains) or line 21 (for losses--cannot exceed $3,000). Include gains realized on the sale of your residence, regardless of your age or whether or not these gains are exempt from federal income tax.

Line 19

Enter alimony received and other taxable income. Describe other taxable income. This includes: awards, prizes, lottery, bingo, and other gambling winnings over $300; farmland preservation tax credits if not included in net farm income on line 17; and forgiveness of debt to the extent included in federal AGI (e.g., mortgage foreclosure).

Line 20

Enter your Social Security, Supplemental Security Income (SSI), and/or Railroad Retirement benefits. Report the amount actually received after deducting any premiums paid for Medicare or prescription drug plans.

Line 21

Enter child support and all payments received as a foster parent. Note: If you received a 2009 Custodial Party End of Year Statement (FEN-851) showing child support payments paid to the Friend of the Court, enter the child support portion here and attach a copy of the statement. Also see line 25 instructions below.

Line 22

Enter all unemployment compensation received during 2009, including benefits exempt from federal and Michigan income tax.

Line 23

Enter other nontaxable income. This includes: compensation for damages to character or for personal injury or sickness; an inheritance (except an inheritance from your spouse); proceeds of a life insurance policy paid on the death of the insured (except benefits from a policy on your spouse); death benefits paid by or on behalf of an employer; the value over $300 in gifts of cash, merchandise, or expenses paid on your behalf (rent, taxes, utilities, food, medical care, etc.) from parents, relatives, or friends; minister's housing allowance; scholarship, stipend, grant, or GI bill benefits; forgiveness of debt to the extent not included in AGI (e.g mortgage foreclosure where the lender forgave the balance due on the remainder of the mortgage), and reimbursements from dependent care and/or medical care spending accounts. Also include such payments made on your behalf except government payments made directly to an educational institution or subsidized housing project. All forgiveness of debt must be included in household income. Report all unemployment compensation on line 22.

Line 24

Enter service-connected disability compensation and pension benefits received from the Veterans Administration and workers' compensation benefits. Veterans receiving retirement benefits should enter their benefits on line 16.

Line 25

Enter the total payments made to your household by DHS and all other public assistance payments. Your 2009 Client Annual Statement (DHS-1241) mailed by DHS in January 2010 will show your total DHS payments. Your statement(s) may include the following: FIP assistance, State Disability Assistance (SDA), Refugee Assistance, Repatriate Assistance, and vendor payments for shelter, heat, and utilities. Note: If you received Form FEN-851, subtract the amount of child support payments entered on line 21 from the total DHS payments and enter the difference here.

Line 28

Enter total adjustments from your U.S. Form 1040, line 36, or U.S. Form 1040A, line 20. Describe adjustments to income. These adjustments reduce household income and include some of the following:

  • Payments to individual retirement accounts (IRAs), SEP, SIMPLE, or qualified plans
  • Student loan interest deduction
  • Moving expenses into or within Michigan can be included in Other Adjustments (MI-1040CR-7, line 28) to reduce household income. Moving expenses when moving out of Michigan cannot be included in Other Adjustments to reduce household income.
  • Deduction for self-employment tax • Self-employed health insurance deduction
  • Health Savings Account contributions and Archer Medical Savings Accounts (MSA)
  • Penalty on early withdrawal of savings
  • Alimony paid
  • Jury duty pay you gave to your employer
  • Any other adjustments to gross income included on line 36 of your 2009 U.S. Form 1040.

Also enter the amount of a net operating loss (NOL) deduction. Note: A deduction for a carryback or carryforward of an NOL cannot exceed federal modified taxable income. Attach a copy of your MI-1045 (or U.S. Form 1045 if you did not file an MI-1045).

Line 29

Enter health insurance premiums, Health Maintenance Organization (HMO) premiums, or other insurance premiums paid for yourself and your family. Include the following:

  • Medical insurance premiums
  • Dental insurance premiums
  • Vision insurance premiums
  • Prescription drug plan premiums
  • Automobile insurance premiums (medical care portion only).

Do not include any insurance premiums deducted on line 28, amounts paid for income protection insurance (long term disability), long-term care insurance, or amounts paid by an employer with pre-tax payroll contributions.

Line 31

Household Income is used to compute your credit(s).

Your Credit

There are two ways to compute a home heating credit: the standard credit and the alternate credit. If you are eligible to claim either credit, figure your credit both ways and claim the larger amount.

Lines 32 through 34: Standard credit.

See Table A on page 15. Find the number of exemptions you are allowed and the corresponding income ceiling amount. If your household income is less than this amount, you are eligible to use this method to calculate your credit.

Example: You and your spouse have three dependent children, so you are allowed five exemptions. Your household income is $15,000. This is less than the $28,387 income ceiling for five exemptions. Complete the form using the standard credit method.

Part-year resident owners, see page 5 to prorate your standard allowance.

Line 35

If your heat is included in your rent or your heat service is in someone else's name at the time you file this claim, you must reduce your computed standard credit by 50 percent (0.50). Multiply line 34 by 0.50. Enter this amount on lines 35 and 40.

Lines 36 through 39: Alternate credit.

If your claim is for less than 12 months or your heat cost is included with your rent, you are not eligible to use this method. If your household income is less than the maximum income for your number of Michigan exemptions, you may claim this credit. See Table B on page 15.

Example: You are single, have one dependent child and your 70-year old father is also your dependent. You are allowed four exemptions. Your annual heat costs were $1,100 and your household income is $5,500. This is less than $22,091, the maximum income for four exemptions.

Line 40

If you completed line 35, you must enter that amount here. Otherwise, enter the larger amount from line 34 or line 39.

Line 41

Multiply the amount on line 40 by 65 percent (0.65) (the percentage of federal home heating assistance funds available for this year) and enter here. This is the amount of your 2009 home heating credit.

Line 42

Indicate your residency status for tax year 2009. If you were a part-year resident during tax year 2009, complete the dates of residency for you and/ or your spouse. You must then prorate your credit following the instructions on page 5 under "Part-Year or Occupied Homestead Less Than 12 Months." If you are a nonresident, you are not eligible for the home heating credit. Do not file this form.

Line 43:

If your heat is provided by DTE Energy, Consumers Energy, or SEMCO Energy Gas, your home heating credit may be sent directly to your heat provider. If the credit amount exceeds your heat account balance, check this box to receive a refund from your heat provider for the overpayment, if eligible (see below). If not eligible, your excess refund will be applied toward future bills. If, after nine months, a refund balance still remains on account with your heat provider, your heat provider will issue a refund to you.

Eligibility requirements. You must have no outstanding balance with your heat provider and you must have not received heat assistance in the past 12 months.

Heat Provider Contact Information

Consumers Energy

1-800-477-5050
www.consumersenergy.com 

DTE Energy

1-800-477-4747
www.my.dteenergy.com 

SEMCO Energy Gas

1-800-624-2019
www.semcoenergygas.com