Michigan Tax Relief
If you have Michigan tax questions or have received an assessment from the Michigan Treasury, contact Michigan tax attorney Andrew Steiger for help resolving your Michigan tax problem.
Michigan Individual Income Tax
Michigan residents are subject to a 4.25% individual income tax with a limited number of deductions and credits. The starting point is the US 1040 return, and may be modified for many reasons including source of income, business income, credits for payments made to other states and special additions and subtractions to income. The Michigan individual income tax penalty for filing late payment is 5% for the first two months after the due date and 5% each month after that up to a maximum of 25%. Interest is also assessed on the tax debt and penalties.
Michigan taxes residents who are domiciled in Michigan on all sources of income, but provides a credit for taxes paid to other jurisdictions on non-Michigan source income. For individuals moving into or leaving Michigan, a part-year resident return is required and Michigan taxes the portion of the year that a taxpayer was a resident under the resident rules, but the portion of the year that the taxpayer was a non-resident would be taxed under the non-resident rule. Michigan non-residents are taxed only on Michigan source income.
Michigan Sales and Use Tax
For businesses that sell tangible personal property, Michigan assesses a 6% sales tax on sales to final consumers.. The Michigan sales tax provides many Michigan sales tax exemptions that businesses must be aware of to properly withhold sales tax and avoid personal liability for any under-withholding. Whether setting up a business, expanding into new product sales or services, or reviewing operations, it is important to understand whether a sales tax obligation exists and how to report it, or how to ensure that your business can prove and support the position that there is no Michigan sales tax obligation.
City Income Tax (Detroit, Grand Rapids, Flint, Lansing, Etc.)
Various cities impose a city income tax that is required by Michigan law. These cities including Detroit, Grand Rapids, Fling, Lansing, and others impose an income tax on residents of those cities and non-residents that work in the city. The income tax rate in these cities varies and the resident tax rate is double the rate imposed on non-residents. Detroit imposes an income tax on residents of 2.4% and non-residents of 1.2%. Grand Rapids has an income tax rate of 1.5% on resident income and 0.75% on non-resident income.
The tax system is similar to a state system by imposing apportionment rules on individuals and businesses, exemptions, filing requirements, and penalties for failing to file and/or pay tax. Cities require separate returns to calculate the city income tax and grant extensions if a return cannot be filed by the due date.
Cities can be aggressive, including the city of Detroit, including assessing non-residents for income earned while working in the city and for collecting taxes after the statute of limitations has expired. Anyone who receives a notice of assessment should understand the timeline for responding to a notice and whether the city has authority to enforce collections against the taxpayer. If you have questions, contact a Detroit tax lawyer at Steiger Tax Law for a free consultation to understand your tax problem and provide advice on how to resolve it. If you need assistance avoiding problems taxes as you plan or expand your Michigan business, contact Steiger Tax Law to develop a comprehensive plan.
Unfiled Michigan Tax Returns
If you have unfiled Michigan tax returns, you may owe penalties and interest depending on if a balance is due. For taxpayers with a substantial tax debt, Michigan offers tax relief options but are more limited than the IRS fresh start program options. Taxpayers should understand that the state of Michigan can and will file a tax lien against your property, which will impair your ability to sell or refinance your property. If you are facing either a Michigan tax lien action or have a tax lien from both Michigan and the IRS, contact Michigan tax attorney Andrew Steiger for help and to understand your options to release or eliminate the tax lien.