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.

 

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 pay 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
 

13. How do I amend my monthly/quarterly return?

Monthly/quarterly returns cannot be amended. The prior period adjustment line number 2 on the return can be used on a future month to add or subtract withholding for a prior period.

 

14. How do I register for City Of Detroit Withholding Tax?

As long as the business is registered for State of Michigan taxes there is no separate registration process for City of Detroit withholding. Submit returns using the Ferderal Employer Identification Number.

If the business is not registered for Michigan taxes but is required to do so, contact the State of Michigan Registration Department at 517-636-6925.
 

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

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.
 

2. I am a partnership within the City of Detroit, do I need to file a return?

    Yes. Every partnership with business activity in the City of Detroit, whether or not an office or place of
    business was maintained in the city, is required to file an annual return using the City of Detroit Income 
    Tax Partnership return - Form 5458.

    Syndicates, joint ventures, pools and like organizations along with LLCs electing to be taxed as
    partnerships at the federal level will also use Form 5458.
 

3. I have elected to pay tax for my partners, will they be required to make tax payments as individuals?

    If the partnership elects to pay tax for the partners by making estimated income tax payments then the partners may be required
    to make payments as individuals, if they have other income attributable to Detroit.

    The annual Form 5458 filed by the partnership should be accompanied by a statement showing the names, addresses and social
    security numbers of the partners on whose behalf the payments are being made.
 

4. Can I elect to pay tax for only certain partners?

    No. The partnership may pay the tax for partners only if it pays for all partners subject to the tax.  Partnerships electing to pay the
    tax on behalf of the partners assume the status of taxpayer tot he following extent:  timely payment must be made and estimated
    income tax payments using Form 5461 are required if the totatl estimated tax for the partnership is expected to exceed $100.

 

W2s

1. How should W2s be submitted?

    W2 information may be submitted in paper format however, electronic submission of W2 information is 
    encouraged to reduce the occurence of errors.  See Form 447 for additional instructions.
 

2. Am I required to submit my W2s electronically?

    No. Submission of W2 information in paper format is permissible however, electronic submission of W2
    information is encouraged to reduce the occurence of errors.  See Form 447 for additional instructions.


3. Can I send my W2s using magnetic media?

    Yes. See Form 447 for additional instructions.


4.  Do I need to submit my City of Detroit with my State of Michigan W2s?

     City of Detroit W2s may be sent with State of Michigan W2s if submitted electronically using Form 447.
     If submitting paper W2s, these must be attached to Form 5321, City of Detroit Income Withholding
     Annual Reconciliation.