Do I need to make estimated tax payments?

The Michigan Income Tax Act requires that a person must make quarterly estimated payments if the person's income tax liability, after credits and withholding, will be $500 or more for the year.

Failure to file and make the required estimated payments may result in an assessment or bill for the penalty and interest being issued by the Michigan Department of Treasury.

Based on the IRS estimated income tax requirements, to avoid penalties for failure to make estimated tax payments, your total tax paid through credits and withholding must be:

90% of your current year's tax liability or 100% of your total prior year's tax liability.  Estimates for taxpayers with an adjusted gross income of $150,000 or more for joint or single filers ($75,000 or more for married filing separate) must equal 90% of the current year's liability or 110% of the previous year's liability.

Farmers, fishermen and seafarers may have to pay estimates but they do have other filing options. For more information refer to the MI-1040 Instruction Booklet.

Penalty is 25% for failing to file estimated payments or 10% of underpaid tax per quarter.  Interest is 1% above the prime rate.