FREQUENTLY ASKED INCOME TAX QUESTIONS

1. WHO MUST FILE A TAX RETURN? Every resident and non-resident who had a gross income of $600.00 or more from sources listed under "What is Taxable Income" must complete and file a return, even though you do not file a Federal return.  If you wish to claim a refund because the tax withheld or paid is more than the tax due, you must file a return.  If you filed a Declaration of Estimated Tax, you must file a return even though there is no change in tax liability.


2. WHAT'S THE DEFINITION OF RESIDENT/NON-RESIDENT?A Big Rapids RESIDENT is a person domiciled within the Big Rapids City limits. "Domicile" means a place where a person has a true, fixed and permanent home.  A NON-RESIDENT is a person domiciled outside the City limits.


3. I ATTEND FERRIS. IS THERE ANYTHING DIFFERENT ABOUT MY RETURN? Married students, living in Big Rapids, where one or both are attending Ferris, are considered residents, unless you are maintaining a permanent residence elsewhere.  Single students, living in Big Rapids and attending Ferris are considered residents unless you are maintaining a permanent residence elsewhere (including parents home) or are registered to vote elsewhere.


4. ARE THERE ANY REQUIREMENTS FOR PERSONS MARRIED FILING JOINTLY OR SEPARATELY? Married persons may file either a joint or separate return. Residents filing jointly must include all income of both spouses. Non-residents filing jointly must include Big Rapids earned income of both spouses. In the case of a non-resident, where only one spouse has Big Rapids earned income, you can claim your spouse as an exemption, however, both must sign the return. If you file jointly, both names must be listed in the heading and both must sign the return. If you file separately, dependents can only be claimed by the spouse who would be entitled to claim such dependents under Federal Internal Revenue Code.


5. WHAT ABOUT DECEASED TAXPAYERS? A return for a taxpayer who died during the taxable year should be filed on the same basis as he or she would have filed if he or she had lived. If a refund is due on the return and the check is to be made payable to a person(s) other than the surviving spouse, a letter of explanation must be attached.


6. WHAT'S THE DUE DATE OF MY TAX RETURN? Your return is due on or before April 30 of the current year. The due date of Big Rapids annual returns may be extended for a period of not to exceed six months. When a City extension is granted, tentative tax must be paid by April 30 of the current year. Applications for extensions are available from the City Income Tax Department. Applying for a federal extension does not satisfy the requirement for filing a City extension an application for a Big Rapids extension must still be made and any tentative tax due must be paid.


7. 1099 MISCELLANEOUS INCOME FORMS Please send copies of 1099 Miscellaneous INcome Forms along with the 1096 Transmittal Form from the IRS. (According to Public Act 211 of the State of Michigan, all employers who have employees working in the City are required to do this.) 1099 Miscellaneous Income Forms only pertain to those employees who worked in the City of Big Rapids
8. WHAT IS TAXABLE INCOME?
   
   RESIDENTS A Resident is subject to tax on all items included in total Federal income (Subject to certain exclusions as listed in "What is Non-Taxable Income.").
   
   
   • Taxable income would include:
   
   
   1. Salaries, bonuses, wages, commissions, fees, vacation pay, profit sharing plan income, severance pay, tips, sabbatical pay, sick pay, and other compensation regardless of where earned.
   2. Fair market value of merchandise or services received as compensation.
   3. Net profit or loss from the operation of a business or profession or other activity regardless of where earned.
   4. Income from a partnership, interest from an estate or trust, bank accounts, credit unions, saving and loan associations and other income regardless of where earned.
   5. Rental income, capital gains, and dividends.
   6. Winnings from the State Lottery and all gamblings.
   7. Scholarship and Fellowship Grant taxable under Federal Revenue Code.
   8. Alimony received.
   9. Sub S Corporation within Big Rapids
   
   
   
   • NON-RESIDENTS
     A non-resident is subject to tax on all items included in total Federal Income which are derived from or connected with Big Rapids sources as follows:
   
   
   1. Salaries, bonuses, wages, commissions, fees, vacation pay, severance pay, profit sharing plans and other compensation for services rendered as an employee in Big Rapids. Vacation pay, holiday pay, sabbatical pay, sick pay, institutional travel and a bonus paid by the employer are deemed to have the same tax status as the work assignment or work location and are taxable on the same ratio as the normal earnings of the employee.
   2. Fair market value of merchandise or service received as compensations.
   3. Net profits from the operation of a business or profession or other activity conducted in Big Rapids (See Schedule 2 for business allocation.) If Business is located inside the City limits, the entire amount of net profits are taxable.
   4. Net profits from rental or real and tangible property located in Big Rapids.
   5. Net profits from sale or exchange of personal property located in Big Rapids.
   6. Do not include on this return any losses or other deductions from a Subchapter S Corporation. All Corporations, including Subchapter S, taxable under the City Income Tax Ordinance must file as conventional corporations with the City of Big Rapids.
   
   
9. WHAT IS NON-TAXABLE INCOME?



• RESIDENTS AND NON-RESIDENTS
  The following types of income are non-taxable both to a resident and non-resident.


1. Gifts, inheritances, bequests and distributions of principal from estates and trusts.
2. Proceeds from insurance, pensions, annuities and retirement benefits (including SOCIAL SECURITY) even if taxable under the Federal Internal Revenue Code.
3. Amounts received for personal injuries, sickness, and disability are excluded only to the extent provided by the Federal Internal Revenue Code.
4. Unemployment compensation, supplemental unemployment benefits, welfare relief payments, workmen's compensation.
5. Interest from obligation of the United States, such as Savings Bonds and Treasury Notes, obligations of the states, or subordinate units of government of states.
6. Dividends on an insurance policy.
7. Compensation received for service in the armed forces of the United States, including Reserves.
8. Conventional IRA or Roth IRA payments made on income taxed by the City only. Conventional IRA or Roth IRA distributions after age 59 1/2 are NOT taxable income. You must attach a copy of your Federal Form. Federal guidelines are followed.
9. Penalty on early withdrawals of savings.
10. Ordinary, necessary, reasonable and non-reimbursed expenses paid or incurred by an individual in connection with the performance of services as an employee. Use Form BR2106.



• NON-RESIDENTS ONLY
  The following items are non-taxable to non-residents only:


1. Interest, dividends and royalty income.
2. Income from trusts and estates.