Frequently Asked Questions

Withholding

1. Who must withhold?

Every employer that has a location in the City of Detroit, or is doing business in the City of Detroit, even if it has no location in the City of Detroit, is required to withhold income tax for its employees. An employer is any individual, partnership, association, corporation, non-profit organization, governmental body or unit or agency, or any other entity that employs one or more persons on a salary, bonus, wage, commission or other basis whether or not the employer is in a business.

 

2. When are my monthly or quarterly returns due?

 

Monthly returns are due on the 15th day of the month following the month in which the tax was withheld.

Quarterly returns are due on the 15th day of the month following each quarter. For 2017, these dates are April 15, July 15, October 15, 2017 and January 15, 2018.

 

3. How do I know if I should file monthly or quarterly?

Employers are required to file monthly if their annual withholding amount is $1,200 or more per year.  Employers withholding $1,199 or less should file on a quarterly basis.

 

4. When is my annual return due?

Form 5321, City of Detroit Income Tax Withholding Annual Reconciliation, is due on February 28. There is no extension to file available for this form.

 

5. If I filed all my monthly or quarterly returns, do I still need to file an annual return?

Yes, all employers registered for city income tax withholding is required to file Form 5321, City of Detroit Income Tax Withholding Annual Reconciliation, each year, even if no tax is due.

 

6. If my monthly or quarterly return is zero, do I still need to file it?

Yes, a return must be filed even if there is no tax liability for the period.

 

7. Will I be charged a late penalty if I file my monthly or quarterly return after the due date?

Yes, if submitting a payment after the due date, include the calculated penalty and interest in the payment amount.

 

8. I am a non-profit, do I need to withhold for my employees?

Yes, a non-profit organization in the City of Detroit is required to withhold income tax from its employees.

 

9. What type of compensation do I have to withhold from?

City of Detroit income tax must be withheld from:

  • All compensation (salaries, wages, commissions, severance pay, bonuses, etc.) of a City of Detroit resident for services rendered or work performed regardless of whether such services or work are performed in or out of the city; and
  • All compensation of a nonresident for services rendered or work performed in the City of Detroit where the City of Detroit is the predominant place of employment.

Vacation, holiday, sick, severance and bonus pay to nonresidents who perform part but not all of their work or services in the City of Detroit are taxable in the same ration as their normal activities.

Example: A nonresident employee who is subject to withholding on 60% of their earnings, because 60% of their work is performed in the City of Detroit, is also subject to withholding on 60% of their vacation, holiday, sick pay, severance pay, bonus pay or wage payments during periods of sickness.

 

10. What type of compensation is not subject to withholding?

Withholding does not apply to:

  • Wages paid to domestic help;
  • Fees paid to independent contractors who are not employees;
  • Payment to a nonresident employee for work or services performed in the City of Detroit, if the predominant place of employment is not the City of Detroit;
  • Payment to a nonresident employee for work or services rendered outside of Detroit;
  • Pensions and annuities, worker’s compensation and similar benefits;
  • Amount paid for sickness, personal injury or disability to the same extent that these amounts are exempt from federal income tax, but the employer must withhold from such payments if federal tax is withheld.
  • Amounts paid to an employee as reimbursement for expenses incurred in performing services.

 

11. Where do I send my monthly or quarterly returns?

Withholding monthly or quarterly returns should be mailed to:

Michigan Department of Treasury

 P.O. Box 30812

 Lansing, MI 48909

 

12. Where do I send my annual reconciliation return?

The annual reconciliation return should be mailed to:

Michigan Department of Treasury

P.O. Box 30812

Lansing, MI 48909

Corporate

1. Who must file?

Every corporation doing business in the city, whether or not it has an office or place of business in the city, is required to file an annual City of Detroit Corporation Income Tax Return, Form 5297.

 

2. Who has to file estimated payments?

Every Corporation with an annual Corporate Income Tax liability of more than $250 must make estimated tax payments. Each payment must approximate the taxpayer’s tax liability for the quarter or 25 percent of the estimated annual liability. Second, third, and fourth quarter payments should include any necessary adjustments for overpayments or underpayments in a previous quarter.

 

3. What are the due dates for the estimated payments?

Estimated payments are due on the 15th of the 4th, 6th, 9th and 13th month of the following year. For example, a calendar filer with a tax year end of December 31st would have estimated payments due April 15th, June 15th, September 15th and January 15th of the following year. 

 

4. Where do I mail my estimated payments?

Corporate estimated payments should be mailed to:

Michigan Department of Treasury

 P.O. Box 30409

 Lansing, MI 48909

 

5. How do I file for an extension?

Corporations can file for an extension to file by using Form 5301, Application for Extension of Time to File City Corporate Income Tax Return.  This form is not an extension of time to pay. The form and payment must be postmarked on or before the original due date of the return.

Corporate extensions should be mailed to:

Michigan Department of Treasury

P.O. Box 30409

Lansing MI 48909

          

6. If I filed an extension with the Internal Revenue Service and the State of Michigan, do I still need to apply for an extension for my City of Detroit Corporate Income Tax Return?

Yes, an approved extension from the Internal Revenue Service or the State of Michigan does not automatically extend to the City of Detroit Corporate Income Tax Return.

 

7. Will I be notified if my extension has been approved?

Yes, taxpayers will be notified by letter whether an extension request is approved or denied.

 

8. When is my annual City of Detroit Corporate Income Tax return due?

For taxpayer with a calendar year end, the due date of the City of Detroit Corporate Income Tax return is April 15th. Taxpayers with a fiscal year end will have a due date of the 15th day of the fourth month following the end of the fiscal year.

 * Please note that for tax year 2017, the return due date is April 17th due to April 15th falling on a Saturday.
 

9. How can I file my City of Detroit Corporate Income Tax return?

City of Detroit Corporate Income Tax returns may be submitted either electronically or using paper forms.

 

10. How do I claim my Renaissance Zone Deduction?

Taxpayers claiming a Renaissance Zone Deduction must file an annual return, Form 5297 City Corporate Income Tax Return and attach Form 5298, City of Detroit Corporation Renaissance Zone Schedule.

Taxpayers must also attach a photocopy of the Renaissance Zone Deduction confirmation letter. Any deduction will be disallowed without this attachment.

 

11. How do I file an amended return?

If a taxpayer needs to correct a return filed previously, use a new Form 5297, City Corporate Income Tax Return, and be sure to check the amended return box atop of page 1.  Complete line 9, including additional explanation or documentation if necessary.

Partnership

1. Can the 179 deduction claimed on IRS Form 1065 be reported on my City of Detroit Partnership return, Form 5458?

Report the 179 deduction on line 23 of Schedule C on Form 5458 and include your 179 deduction on the attached statement.