Michigan Builders - Use Tax

[BobbyLucas]

(Please, pretty please, only reply if you have information specific to Michigan, or can point me to someone who does)

Michigan builders: Did you pay-as-you-go for use tax on your kits, or pay the lump sum right before/after registering? Looking for advice and details of the process for each. My situation follows...

I bought my first kit in 2019 and wanted to pay as I went, so on my MI-1040, using TaxAct online, I claimed the empennage kit and paid the use tax. Fast-forward to this year, I'm starting to prepare my taxes and planned to claim the fuse and finish kits, but... Looking at last years return, both my paper copy and online, I cannot see any detail about what the use tax I paid was for. I'm sure I recall entering a description that it was for the empennage kit and adding my builder number, but looking now I don't even see anywhere to put that information - I only see fields for total dollar amount of all purchases?? Did I miss a form somewhere?

Of course I can't get anyone on the phone from MI department of treasury, or even TaxAct. smh

Am I better off waiting until registration to pay the use tax? Might have to kiss last years payment goodbye, bin it to cost of education.

[RV10Pilot]

Originally Posted by BobbyLucas

(Please, pretty please, only reply if you have information specific to Michigan, or can point me to someone who does

I am not very good at following instructions, since I paid my use tax in New Jersey as I built. But I do use TaxAct

Often TaxAct will ask for information that is for your records and not reported to the federal or state tax agency. If you filed electronically you should have a pdf of what was submitted. My guess is that it does not ask for a description of what the use tax is for, but rather just a total.

[BobbyLucas]

Originally Posted by RV10Pilot

I am not very good at following instructions, since I paid my use tax in New Jersey as I built. But I do use TaxAct

I'll allow it.

Originally Posted by RV10Pilot

Often TaxAct will ask for information that is for your records and not reported to the federal or state tax agency. If you filed electronically you should have a pdf of what was submitted.

I was thinking the same thing, but I could not find the information anywhere in my TaxAct account online, or the paper copy in my file, or the downloaded pdf.

What's worse, from the total I paid, I clearly claimed more than just the empennage kit, but I can't recall what it would have been. (EDIT: Luckily figured out it was the down-payment for the fuse kit)

[Greenley]

If you can still bring up last years return you should be able to bring up the schedule and print a copy. I did that each time I bought a kit. When I got my air worthiness I wrote up a cost justification showing the kit sections, and that I had paid taxes already on that, had purchased a used engine and over hauled it myself so no taxes, and the main invoice from stein. I sent them that documentation along with a check for the taxes on the avionics and they were happy. If I had waited to hear from them I would have had to talk them down from the much higher number they would have come up. I feel that being proactive saved a lot of money. Oh, and this was for Michigan.

[BobbyLucas]

Originally Posted by Greenley

If you can still bring up last years return you should be able to bring up the schedule and print a copy. I did that each time I bought a kit. When I got my air worthiness I wrote up a cost justification showing the kit sections, and that I had paid taxes already on that, had purchased a used engine and over hauled it myself so no taxes, and the main invoice from stein. I sent them that documentation along with a check for the taxes on the avionics and they were happy. If I had waited to hear from them I would have had to talk them down from the much higher number they would have come up. I feel that being proactive saved a lot of money. Oh, and this was for Michigan.

Do you know which schedule specifically? The 1040 itself does not have any fields that I can see to describe what it is you're paying the use-tax for, it only says how much tax you paid. Does your tax return actually say "RV-10 Kit" on it somewhere?

[odens_14]

No help with tax act or Michigan but wanted to point out that Van's has started charging sales tax in many states and it looks like Michigan is on the list. Verify you weren't taxed on kits purchased in 2020 so you're not paying twice.

https://www.vansaircraft.com/2020/01...ecific-states/

[Brian Perry]

I completed my 14A recently. I registered with the FAA in October and I think that prompted Michigan to send me a request to pay the tax. I received the request to pay the use tax in January. They did not request any specific amount. I did not pay any sales tax on any of the kits but they were delivered in 2018-early 2020. I did pay sales tax on the Thunderbolt engine that I bought through Van's which was delivered in July 2020. I decided to wait until completion and do it all at once for simplicity's sake.

[BobbyLucas]

Originally Posted by odens_14

No help with tax act or Michigan but wanted to point out that Van's has started charging sales tax in many states and it looks like Michigan is on the list. Verify you weren't taxed on kits purchased in 2020 so you're not paying twice.

https://www.vansaircraft.com/2020/01...ecific-states/

Thanks for the heads up, didn't realize Michigan had been added to the list. Looks like that was updated in Jan 2020? I just checked my last order, down payment made in April and balance paid in June, and no sales tax was collected. Hmm.

[9GT]

Keep good records of everything you bought and separate those receipts by what you did and did not pay MI taxes on. When I built my RV-10, pretty much everything I purchased did not include any MI sales tax, so when it came time to register the plane, I made copies of the receipts, a completed MI tax form, and forwarded those, along with a big $$$ check to the MI department of treasury. I paid no penalty. Remember when it comes to taxes: report what you have to and claim whatever deduction you can. There is no good reason to pay more than you are legally required to.

[BobbyLucas]

Originally Posted by Brian Perry

I completed my 14A recently. I registered with the FAA in October and I think that prompted Michigan to send me a request to pay the tax. I received the request to pay the use tax in January. They did not request any specific amount. I did not pay any sales tax on any of the kits but they were delivered in 2018-early 2020. I did pay sales tax on the Thunderbolt engine that I bought through Van's which was delivered in July 2020. I decided to wait until completion and do it all at once for simplicity's sake.

So are you just going to put a lump sum on this year's MI-1040 to cover everything but the engine, or did they provide different instructions in their request for payment?