The Michigan tax year has come to an end and it’s time to start preparing individual income tax returns. For some, this can be a challenging experience but it doesn't have to be. If you organize yourself, the process will be smoother. Learn the rules and regulations that the Michigan Department of Treasury (DOT) has in place. This will save you money in penalties and interest in the long run.
Who Must File Michigan Income Taxes?
Full-year Michigan residents are required to file a federal tax return must file. This holds true even if you don’t owe Michigan state tax. If you didn’t have to file a federal tax return but you have income that would be included in federal adjusted gross income (AGI) and exceeds your allowed Michigan exemption allowances, you must file a state return.
If you are a part-year resident and you earned income while a Michigan resident, you must file an individual tax return.
A nonresident who earned income from Michigan sources must file a state tax return.
Michigan nonresidents, who lived in a reciprocal state like Illinois, Indiana, Kentucky, Minnesota, Ohio or Wisconsin who had Michigan tax withheld from their wages, must file a tax return. This will allow you to claim a refund of the withheld taxes.
What Are the Forms to Use?
A full-year Michigan resident uses Form MI-1040. Nonresidents and part-year residents need to use Schedule NR. The form that is sent in with any payments is the tax payment voucher Form MI-1040-V. If you have to send in an amended return, explaining changes, you will use Form 5530, Schedule AMD.
What Is the Tax Rate in Michigan?
Michigan has a flat income tax rate. The current rate is 4.25 percent. Regardless of what your income is, all taxpayers pay this rate.
What Are the Filing Deadlines and Extension Process?
The due date for filing individual returns, extensions and paying taxes is April 18, 2022.
You don’t need to file an MI extension if you expect a tax refund, but you will need to file if you want to receive the refund.
If you owe taxes, you must either submit a return or request for an extension by the April 18 deadline. The extension deadline is October 17, 2022. Despite having an extension, your taxes must still be paid by the April 18 deadline.
Paying all your taxes, despite not filing, is considered an extension, but you still must file by the October deadline.
What Are the Penalties for Late Filing and Underpayment of Taxes?
The penalty for late taxes and filing is 5 percent of the total unpaid taxes for the first two months. After the first couple of months, the penalty is 5 percent, assessed per month. After that, the maximum is 25 percent.
Where Do I Mail/E-file My Michigan Return?
If you have a zero balance or refund coming to you and you are using Form MI-1040, mail your return to: Michigan Department of Treasury, Lansing, MI, 48956. If you are including a payment with Form MI-1040, mail both to: Michigan Department of Treasury, Lansing, MI 48929.
Although Michigan doesn’t endorse or guarantee tax companies that provide free e-filing software, there are several available.
- Free File Alliance: This is a nonprofit coalition of industry-leading tax software companies that partnered with the IRS to provide free state and federal tax preparation and e-filing. You must have an AGI between $0 and $73,000 and live in Michigan to qualify.
- Online Taxes (OLT): This company provides free MI and federal tax preparation and e-filing if your AGI is between $16,000 and $73,000.
- TaxSlayer: This company provides free MI and federal tax preparation and e-filing for simple tax situations, but charges a fee if you have credits and deductions.
How Do I Pay Taxes Due?
To pay taxes, you can mail a check or money order to the Michigan Treasury Department using the filing address. You can also make a payment online.
To make a payment online, you will need a valid email address. The state of Michigan accepts ACH. There are no fees for ACH transactions from a checking or savings account. You must submit the nine-digit financial institution routing number.
You can also use a credit or debit card for payment. Discover, Mastercard or Visa are accepted. There is a processing fee of 2.35 percent for each transaction. A debit card payment is charged a flat $3.95 fee.
If you need assistance, Michigan provides eServices. These include an account services portal, an inquires portal and a guest services portal. You will need a valid email address. Tutorials are also provided.
Michigan offers an installment agreement for those taxpayers who cannot pay their taxes. But keep in mind that even if you are making monthly payments, penalties and interest rates will still be applied to the owed balance. An installment agreement duration is 48 months or less.
There is also the Michigan Offer in Compromise (OIC) program. Michigan’s OIC settles tax debt by accepting a lower amount of the tax owed. This includes penalties and interest. But there are specific qualifiers to participate in this program.
Where Can I Check My Michigan Refund Status?
You can check your Michigan refund status online. The primary filer needs to provide their last name, Social Security number, tax year, filing status and AGI or Total Household Resources (THR) to check on a refund.
Another source is to call the Michigan DOT. The individual income tax phone number is 517-636-4486.
What About State Taxes If You’re Self-employed?
An individual who is self-employed files their business income on their personal income tax return.
What About Michigan State Taxes If You’re a Business?
Michigan corporate income tax (CIT) is 6 percent. It is applied to C-corporations and taxpayers that are taxed federally as corporations.
The CIT is different for small businesses. It offers an alternative tax rate of 1.8 percent of AGI. Insurance companies and financial institutions also pay different tax rates.
Taxpayers with less than $350,000 in apportioned or allocated gross receipts are not required to pay the CIT.
Enacted in 2021, Michigan pass-through entities can elect to pay a 4.25 percent income tax. This allows these entity owners to claim a tax credit against their Michigan individual income tax returns. This affects pass-throughs such as LLCs, partnerships and S-corporations.
Questions regarding business taxes can be answered by calling 517-636-6925.
There is also the business tax eService’s portal help center. Tutorials are available.
Rates and dates in this article are correct as of publication. But check for any changes at the Michigan Department of Treasury website before you file.
- Michigan Taxes: Chart if You are Required to Pay Taxes
- Michigan Department of Treasury: 2020 Individual Income Tax Forms and Instructions
- eFile: Michigan Tax Brackets, Rates and Standard Deductions
- eFile: Michigan Income Tax Return, Form
- Michigan Department of Treasury: Calculate Late Penalty and Interest
- Michigan Department of Treasury: Revenue and Administrative Bulletin 2021-5
- Michigan Department of Treasury: Estimate penalty and Interest
- Michigan Department of Treasury: Michigan Department of Treasury Mailing Addresses for 2020 Tax Forms
- Michigan Department of Treasury: Frequently Asked Questions
- Michigan Department of Treasury: Make Michigan Individual Income Tax e-Payments Online Secure, Fast, Convenient
- FreeFile: The Free File Alliance: Serving the American Taxpayer
- TaxAct: File Your Federal & State Taxes for Free
- TaxSlayer: Ready to Get Your Biggest Refund?
- TurboTax: IRS File Program
- Michigan Department of Treasury: e-File for a Fee
- 1040 NOW: Free Easy & Accurate Guarantee
- Michigan Department of Treasury: Individual Income Tax eServices Portal Help Center
- Michigan Department of Treasury: Offer in Compromise
- Michigan Department of Treasury: Corporate Income Tax
- National Law Review: Michigan Pass-Through Entity Tax Enacted – Quick Action May be Needed for 2021
- Michigan Department of Treasury: Business Tax eServices Portal Help Center
- Michigan Department of Treasury: Michigan Department of Treasury
Anne attended University of Akron and went on to have a career in television sales. Working as a commercial property and casualty insurance agent for nine years allowed her to learn about different businesses' needs. She has also owned an advertising agency where she created marketing capaigns for various clients. Anne has written for several publications. She currently resides in Charleston, SC.