Instructions For Form 777 - Resident Credit For Tax Imposed By A Canadian Province - Michigan Department Of Treasury
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1Instructions for Form 777
2016 Form 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 2016 tax year
Canadian Form T-4 to complete your Michigan Form 777.
is the conversion rate of 75.51% (0.7551).
Attach copies of all of these forms to your MI-1040 return.
If you used a conversion rate on your 2016 U.S. Form 1116
Who May Claim This Credit
other than 75.51%, 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 2016 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 reported in your 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 fringe benefits amount
a Michigan tax credit.
included in AGI on your U.S. Form 1040. Note: This
Credit Computation
reduction must be accompanied by verification from your
The maximum credit for tax imposed by a Canadian
employer.
province is the smaller of:
Line 12: Enter contributions to a Canadian Pension Plan
•
Michigan tax due on the Canadian income, or
from boxes 16 and 17 on the Canadian Form T-4 (maximum
of $2,544.30) or from line 421 of the Canadian return.
•
The provincial tax you did not claim for credit on your
U.S. Form 1040.
Part-year residents must prorate the amount on this line.
Divide Canadian salaries and wages earned as a Michigan
Credit is not allowed for:
resident by total Canadian salaries and wages earned. Then
•
Canadian provincial tax unused in prior years but
multiply the total contribution from boxes 16 and 17 by the
carried over to your 2016 U.S. Form 1116.
resulting percentage.
•
Canadian provincial tax unused in 2016 and claimed as
Line 13: Multiply line 12 by 75.51% (0.7551) and enter
a carryover deduction to future years.
the result.
•
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
state or Canada, part-year resident wages).
Note: Interest and dividends from Canada received by a
Michigan resident are taxable by Michigan as Michigan
•
Canadian federal tax, contributions to Canadian Pension
sourced income.
Plan, or taxes paid to any other foreign country or
subdivision of a foreign country, other than a province
Line 29a: Enter the portion of the U.S. foreign tax
of Canada.
credit reported on U.S. Form 1040, line 47 that is based
on Canadian federal tax, Canadian provincial tax, and
NOTE: If you reduce your U.S. income tax by a carryover
contributions to Canadian Pension Plan paid or accrued in
of provincial tax, you must amend your prior year Michigan
2016. The amount entered must not include the portion of
income tax return to reduce the credit computed on that
the U.S. credit attributable to carryover of prior year tax
year’s return.
and must not include Canadian taxes carried over to a year
after 2016. In computing the U.S. credit, it is presumed the
Canadian federal income tax is claimed first.
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