Fema Employment

Why does Michigan put half your federal self-employment tax as an ADDITION to your income?

I'm trying to put my michigan taxes together and this doesn't make sense. Michigan's 1040 Schedule 1 has, under *Additions to Income*, a box to enter one-half of the self-employment taxes you PAID to the federal government, and adds this as an *addition* to your gross income. Basically, it's making me pay taxes on taxes that I paid in addition to my full income! So... WTF? Whose smart idea was this? I know I'm paying both the employee and employer portions of the SS, etc. tax. But the MI form confuses me. It takes my full gross income, taxes me on that, and takes half the federal tax I paid and taxes me on that as well. There's no deductions, it's an *addition*. So if half my federal tax was $500, I get taxed twice on that $500 by the state.

Public Comments

1. MI gives you a deduction for YOUR share of Social Security and Medicare taxes paid, NOT for the employer portion. Since you are self-employed you are paying both portions of the SS and Med taxes. This is pretty common practice for the states that allow a deduction for SS and Med taxes.
2. What is actually happening is that when you file your Federal Return, in order to come up with your AGI, you are able to deduct 1/2 of your self employment tax from your income. Now, when you file your Michigan taxes, you use the AGI number from your Federal return. (which does not include 1/2 SE tax). So, since the State of Michigan wants all of their money....they make you add the 1/2 SE tax back in. So you're not being double taxed....just taxed to death.