Desktop: Michigan City Income Tax - Common Form

The following Michigan cities impose an individual income tax and accept the Common Form for their annual income tax return. TaxSlayer Pro supports preparing an annual income tax return for these cities:

Two Michigan cities impose an individual income tax but use their own forms. Click the city for more information:

• Detroit
• Hudson (Form HU-1040 is not supported in TaxSlayer Pro)

Income that is considered taxable, exemptions, deductions, tax rates, and other aspects of the tax are set by State of Michigan ordinance. Each city sets its own minimum income filing threshold. Most cities tax residents at a rate of 1% and nonresidents at a rate of 0.5%, but Detroit, Grand Rapids, Highland Park, and Saginaw have different, higher rates. The filing deadline for city income tax returns is April 30. If the due date falls on a weekend or holiday, it is extended to the next business day.

TaxSlayer Pro does not support married taxpayers filing jointly on their federal return filing separate city returns. TaxSlayer Pro also does not support the city extension form. To get a particular city's extension form, click the city's Forms link above. As always, an extension to file is not an extension to pay any income tax due.

To access the Common Form in TaxSlayer Pro, from the Main Menu of the Michigan return select:

• MI Miscellaneous Forms
• MI City Taxes
• Common Form

Select New and select the desired city from the list. Next, select what type of return to create.

• Resident - The taxpayer was domiciled in the city for the entire year.
• Nonresident - The taxpayer was domiciled outside the city for the entire year but earned income in the city.
• Part-Year Resident - The taxpayer was domiciled in the city for part of the year. For married taxpayers filing a joint return, choose Part-Year Resident if either of them was a resident for part of the year.

Personal Information

Under the Personal Information menu you can indicate whether the taxpayer and/or spouse is entitled to the additional exemption for being deaf or disabled and also indicate the domicile address(es) during the year. Space for four addresses is provided.

Total Income

Income from the Federal return is carried into the city return here. Adjust it as needed to exclude income not earned in the city.

Verify each income item for accuracy. City tax withholdings on a W-2 will carry to the city return if the city name is correctly indicated in the Locality box on the W-2. (When entering the W-2 on the federal return, if the state of MI is indicated in the state withholding section, the screen will display the correct spelling for the city names in the Locality box.)

Part-Year Resident Returns: Note that part-year resident returns have essentially three categories of income:

• Income earned or received while a resident (fully taxed);
• Income earned or received in the city while a nonresident (taxed at half the resident rate);
• Income earned or received outside the city while a nonresident (not taxed);

For part-year resident returns, Form CF-1040 Lines 1-22 will be blank. Instead, Schedule TC will be used to calculate the tax on income.

In the Total Income section, examine each item of income and where applicable enter the nonresident portion on Exclusions/Adjustment and enter the same amount on NonResident amount.

For W-2s (listed in the Part Year Income Menu under Gross Wages), there are several additional bits of information that need to be provided, the most important of which is completion of the Wage Allocation Menu. Tax will not calculate until this menu is completed for each W-2. See W-2 information below.

NOL Carryforward: An NOL carryforward from a prior year Form CF-1040 Schedule TC Line 20c is entered as an adjustment under Other Income. Note that its status as a resident or nonresident NOL is retained.

• A prior-year resident NOL carryforward can be claimed as a deduction against resident or nonresident income in full.
• A prior-year nonresident NOL carryforward can be claimed as a deduction in full against nonresident income or at half the amount against resident income.

Total Deductions

Enter an amount for deductions as allowed by law.

• Qualified Plans Deduction - Individuals who are self-employed can deduct payments to a qualified retirement plan to the extent allowed under federal IRC § 404. Payments to an IRA can be deducted to the extent allowed under federal IRC § 219.
• Employee Business Expenses - Expenses that are "ordinary, necessary, reasonable, and unreimbursed" paid by a taxpayer in the course of performing services as an employee can be deducted. This includes:
  • travel, meals, and lodging while away from home;
  • transportation other than commuting to and from work;
  • expenses of an outside salesperson while away from the employer's place of business;
  • expenses incurred under an expense allowance arrangement where the reimbursement is included in compensation on the W-2.
• Moving Expenses - Moving expenses can be deducted to the extent allowed under federal IRC § 217. For tax years 2018 through 2025, this deduction is limited to active duty members of the armed forces. See IRS Form 3903 instructions.
• Alimony Paid - Alimony payments deducted on the federal return will automatically carry here.
• Renaissance Zone Deduction - Depending on the city, the Renaissance Zone Deduction may or may not be applicable and available.
• Net operating loss adjustment (part-year resident returns only) - If the total income after deductions for the resident period is a gain and the nonresident period is a loss, or vice-versa, some or all of the loss can be moved to offset the other gain. To determine if there is any loss that can be used to offset a gain, print (to paper or PDF to the screen) Form CF-1040 and examine Schedule TC Line 20a.
• If Line 20a Column C (Taxable Resident Income) is a gain and Column D (Taxable Nonresident Income) is a loss, enter half the amount of the loss as a negative number in Resident - Net operating loss adjustment and enter as a positive number the amount of the loss in Nonresident - Net operating loss adjustment. Limitation: the Nonresident adjustment is limited to twice the Resident income on Line 20a Column C.
• If Line 20a Column C (Taxable Resident Income) is a loss and Column D (Taxable Nonresident Income) is a gain, enter the amount of the loss as a positive number in Resident - Net operating loss adjustment and enter as a negative number the amount of the loss in Nonresident - Net operating loss adjustment. Limitation: the adjustment in both columns is limited to the Nonresident income on Line 20a Column D, i.e., the loss cannot make Line 20a Column D less than zero.

After making these adjustments, any remaining loss on Form CF-1040 Schedule TC Line 20c in either Column C or D can be carried forward, but it retains its status as a resident or nonresident NOL.

Total Payments & Credits

Tax payments from W-2s will flow here if the city name is correctly indicated in the Locality box on the W-2. Also indicate under this menu payments from estimated taxes, extensions, and carryforwards from last year; credit for taxes paid by a partnership on behalf of the taxpayer; and credit for taxes paid to another city.

Total Interest and Penalty (CF-2210)

Penalty and interest may be assessed on the balance due if the estimated tax paid is less than 70% of the balance due this year or less than 70% of the balance due last year. No further penalty and interest will be assessed if the balance due is paid by the due date or extended due date, whichever applies.

Refund or Amount Due

If the return results in a refund, you will have the option to apply part or all of it to next year's return and, if available, to designate part or all of it as a donation to a city department or fund.

W-2 Information

Information flowing from W-2s on the federal return can be adjusted as needed here. This menu can also be gotten to from the Main Menu of the city return here:

• Total Income
• Gross Wages

On nonresident and part-year resident returns, for each W-2 you will need to visit the Wage Allocation Menu and indicate the number of days the taxpayer worked for the employer, the number of vacation, holiday, or sick days, and the number of days worked inside the city. This information will be used to calculate the percentage of days worked in the city to determine the nonresident portion of wages that is excludible from income tax. On part-year resident and nonresident tax returns, tax will not calculate until the allocation information is entered.

Note: Michigan City Common forms cannot be electronically filed through TaxSlayer ProWeb. They must be paper filed.