Registration Requirements in Michigan

All businesses in Michigan are required to register with the Michigan Department of Licensing and Regulatory Affairs. More information can be found on their website below. 

Businesses are also required to register with the Michigan Department of Treasury. More information can be found on their website below. 

S Corporation Tax

Michigan recognizes the federal S-election, and Michigan S corporations are not required to pay income tax to the state. However, individual S corporation shareholders will owe state tax on their share of the company’s income.

Partnership Tax

Not required to pay income tax to Michigan. Business income is passed to partners who pay Michigan income tax on their personal return.

Flow Through Withholding

Michigan Flow Through Withholding was repealed on June 9th, 2016 under PA 158. Per PA 158, Flow Through Withholding businesses are no longer required to withhold income tax on their members share of income or file Michigan Flow Through Withholding quarterly returns. Generally, members with a Michigan filing requirement will file a Michigan individual income tax return. Flow through entities may file a composite return on behalf of nonresident members. 

Composite Tax

Flow through entities may file a Michigan composite individual income tax return on behalf of two or more nonresident members who are subject to Michigan individual income tax. The rate of tax on composite tax returns is 4.25%. The Michigan composite tax return can be found at the following link.

Individual Income Tax

Michigan has a default static conformity to the Internal Revenue Code as of January 1, 2018. However, taxpayers may elect rolling conformity if they prefer.

The starting point for computing Michigan's personal income tax liability is the federal adjusted gross income.

Michigan does not offer a standard deduction unless you are over 67 years old. Itemized deductions are not offered.

Personal exemptions are offered. Here are the amounts.

Single: $4,750

MFJ: $9,500

Dependents: $4,400

They do not conform to the Internal Revenue Code (IRC) section 199A, also known as the QBI deduction.

Taxpayers should file an individual income tax return if they are due a refund, owe tax, or their AGI exceeds their exemption allowance. 

Michigan has a flat tax rate at 4.25%

Taxpayers required to file will use Michigan Form MI-1040 Which can be found at the following link.

CARES Act Guidance

There is limited guidance from Michigan as far as decoupling from or conforming to the CARES Act provisions. Michigan specifically decouples from the IRC Section 168(k) of the CARES Act regarding accelerated depreciation for Qualified Improvement Property (QIP).

Due Date

Individual income and composite tax returns are generally due on April 15th after the close of the calendar year. 

Filing An Extension 

Taxpayers unable to file their returns by the due date and requesting an extension to file their return will need to file Form 4, which can be found here.

This form will allow a 6 month extension for individual income tax and composite tax returns. 

Requesting an extension to file a return does not grant an extension to pay. If you will owe taxes upon filing your return, you will need to make a payment along with the request for an extension to file. 

Estimated Payments

Estimated payments are not required for flow through entities. Estimated payments are required for taxpayers who expect to owe more than $500 in tax after exemptions and credits. For composite filers, if the income tax liability for each member is over $500 estimated payments must be made. 

Composite filers will use Form MI-1041ES found here:

Individual income tax filers ue form MI-1040ES found here:

Additional Information

If your business was formed or is located in another state, but generates income in Michigan, it may be subject to Michigan taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.

Michigan Department of Treasury 

Michigan License and Regulatory Affairs,4601,7-154--22352--,00.html

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