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INSTRUCTIONS FOR SCHEDULE P OF L-1040
GENERAL INFORMATION
The purpose of Schedule P is to help the part-year resident who LINE 7 – GAIN OR LOSS FROM THE SALE OR EXCHANGE
earned income both as a Lapeer resident and as a nonresident working OF PROPERTY
in Lapeer. Certain kinds of income are taxed differently to residents of Residency status on the date the sale or exchange of property took
Lapeer and nonresidents working inside Lapeer. place determines whether the sale or exchange is considered a
transaction by a resident or a nonresident.
Schedule P must be filed with a Lapeer Individual Tax Return (L-1040).
Instructions for the resident individual return apply to income earned SALES OR EXCHANGES WHILE A RESIDENT
while a resident. Instructions for the nonresident apply to income All gains or losses from the sale of both tangible and intangible
earned in Lapeer while a nonresident. The instructions for both returns property are taxable to residents regardless of where the property is
should be read before attempting to fill out Schedule P. located. The Lapeer Income Tax Ordinance follows the Internal
Revenue Code except for gains on the sales of obligations of the
Page 2 of the L-1040 return must be filled out where required and the United States (and subordinate units of government) and gains from
totals carried over to the appropriate lines on Schedule P. All sales or exchanges of property purchased prior to January 1, 1967.
supporting schedules must be attached.
SALES OR EXCHANGES WHILE A NONRESIDENT
Complete lines 1a through 1d with information from the top section of Only that portion of a gain or loss from the sale of tangible real and
L-1040. personal property located in Lapeer occurring after January 1, 1967 is
taxable to a nonresident. The gain or loss from the sale of intangible
COMPUTATION OF TAXABLE INCOME property is not taxable to a nonresident.
Lines 2 through 9 of Schedule P describe the kinds of income subject
to tax. Column 1 is for income earned while a resident of Lapeer. LINE 8 – INCOME (OR LOSS) FROM RENTAL REAL
Column 2 is for income earned while a nonresident. Shaded areas in ESTATE, ROYALTIES, PARTNERSHIPS, TRUSTS, ETC.
column 1 or column 2 indicate income as a nonresident is not taxable
or indicate the line is not applicable to the particular column. RENTAL AND ROYALTY INCOME
Rental and royalty income earned while a resident must be reported
The following instructions for specific kinds of income must be used regardless of the location of the property. Nonresidents must report
together with the instructions for the Lapeer resident and nonresident only that portion of rental income derived from the rental of real and
returns. tangible personal property located in Lapeer.
PARTNERSHIP, ESTATE AND TRUST INCOME (OR LOSS)
LINE 2 - WAGES, SALARIES, COMMISSIONS, TIPS, SICK Partnership, trust and other similar income of a resident must be
PAY, ETC. reported regardless of where located. Attach a copy of federal
All wages earned while a resident must be reported in column 1 Schedule K-1. A nonresident must report only that portion of
regardless of where earned. To determine resident wages use a check partnership income (or loss) allocated to Lapeer on the partnership's
stub close to the date of the move as a guide. Nonresident wages for Lapeer Partnership Return (L-1065). If there is no partnership return
an employer equal box #1 of the W-2 form (total wages) less resident on file the processing of the individual return will be delayed until a
wages reported in column 1. Taxable nonresident wages earned in partnership return is filed. Income from estates, trusts, etc is not
Lapeer are calculated for each employer as follows: taxable to a nonresident.
1. Compute the number of actual days worked in Lapeer as a
nonresident for the employer. LINE 9 – OTHER INCOME
2. Compute the total number of days worked while a nonresident for Other income of a resident is taxable. See resident return instructions.
the employer. Other income of a nonresident earned in Lapeer is taxable. See
3. Divide the days worked in Lapeer by the total days worked as a nonresident return instructions for taxability of a nonresident's other
nonresident to compute the percentage of nonresident wages earned in income.
Lapeer.
4. Multiply the wages as a nonresident by the percentage earned in
Lapeer (number 3 above) to calculate nonresident wages earned in LINE 11 – DEDUCTIONS
Lapeer. With the exception of the KEOGH, SEP and SIMPLE retirement
5. Enter the nonresident wages earned in Lapeer in column 2 for each deduction, residents and nonresidents are limited to the deductions
employer. listed on lines 11 through 14. The KEOGH, SEP or SIMPLE retirement
deduction must be included on line 6 (See instructions for line 6)
LINE 4 – INTEREST INCOME
Interest received while a resident (minus interest from government LINE 17 – PERSONAL EXEMPTIONS
obligations) is taxable regardless of origin and must be entered in Complete the exemption section of the L-1040 return (lines 1a through
column 1. Interest received while a nonresident is not taxable. 1f) and enter the total number of exemptions on line 17 of Schedule P.
Multiply number of exemptions by $600. Enter total on line 17, column
LINE 5 – DIVIDEND INCOME 1. If line 17 exceeds resident income on line 16, column 1, enter the
excess exemption amount on line 18, column 2.
Dividends received while a resident (minus dividends from government
obligations) are taxable and must be entered in column 1. Dividends
received while nonresidents are not taxable. COMPUTATION OF TAX
Line 21- Multiply amount on Line 19, column 1 by 1% (.01).
LINE 6 - BUSINESS, PROFESSIONAL AND FARM INCOME Line 22- Multiply amount on Line 20, column 2 by ½% (.005).
Line 23- Add line 21, column 1 and line 22 column 1.
Business, professional and farm income earned while a resident of
Lapeer is taxable regardless of where the business or profession is If combining lines 21 and 22 results in tax due, the tax due must be
conducted. Nonresident business, professional and farm income entered on line 23 Schedule P and line 19 of the L-1040 return.
earned in Lapeer is taxable. See the instructions for the nonresident However, if combining lines 21 and 22 results in a negative tax enter
return to determine the amount of this income to report. zero on line 23 of Schedule P and on line 19 of the L-1040 return.
The KEOGH, SEP or SIMPLE retirement deduction is subtracted from
business, professional and farm income prior to the income being COMPLETION OF L-1040 RETURN
entered on line 6. This deduction must be allocated between resident Schedule P is not a return. It must be attached to an L-1040 return.
and nonresident status in the same manner as income. Attach After entering the tax on line 19 of the L-1040 return, follow the L-1040
supporting schedules detailing computation of this deduction. return instructions to complete the remainder of the return
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