Business Taxes IconIncome Statements (W-2s and 1099s)


Income Statement Overview

  • Who is required to send W-2s to Treasury?

    Treasury requires the following W-2 issuers to file state copies with Michigan:

    • W-2 when issued to a Michigan resident employee, to report work performed in Michigan, or to report Michigan income tax withheld.
    • W-2C if withholding was erroneously underreported on the original W-2.
    • W-2G when required to report certain gambling winnings of, and withholding for, nonresidents of Michigan.
  • Who is required to send 1099s to Treasury?

    Treasury requires 1099 issuers (specifically 1099-R, 1099-MISC, and 1099-NEC) to file state copies whenever issued to a Michigan resident, without regard to where the issuer is domiciled, where the resident’s work or services were performed, or whether or not withholding is indicated on the form.

  • Why would there be withholding on a 1099?

    The IRS determines if a person or business paying compensation to another person or business has an employee or contractor relationship. Generally, the type of income statement form issued depends on the relationship (W-2s for employer/employee relationships; 1099s for independent contractor/non-employee relationships). As it relates to income tax, an employee relationship requires an employer to withhold on wages; in a contractor relationship, the worker is responsible for their own income tax. Michigan follows these federal guidelines. For guidance on determining of you have an employee or contractor relationship with someone who works for you, refer to IRS Publication 15, Employer’s Tax Guide (Circular E) and the Michigan Unemployment Insurance Agency (UIA) Fact Sheet 155.

    Generally, a contractor can request withholding from their pay. The business receiving contractor services could agree to withhold on the contractor’s behalf.

  • Does Michigan allow income statement submissions with truncated Social Security Numbers (SSN)?

    No, SSNs should be unobstructed and unaltered on income statements.

  • What is Form 1099-NEC and what changes did it cause?

    Prior to tax year 2020, 1099-MISC included reporting miscellaneous income and nonemployee compensation. Beginning tax year 2020, nonemployee compensation must be reported separately on a newly developed form: 1099-NEC. 1099-MISC still exists (and has been redesigned); it is now used for truly miscellaneous income like royalties, rents, prizes/awards, crop insurance, etc.

    Treasury requires 1099-MISC state copy filing per MCL 206.707(1). Treasury has the authority to require 1099-NEC state copy filing per Internal Revenue Code (IRC Chapter 61; Section 331).

  • When are state copies of income statements due?

    Most state copies of income statements are due to Treasury on or before January 31. Form 1099-MISC is the exception: paper filed due February 28, electronically filed due March 31.


Filing Income Statements Electronically

  • How can I file state copies of income statements (W-2 and 1099 forms)?

    View Treasury’s Income Statement Remittance Guide for W-2 and 1099 filing options.  

  • Am I required to send income statements to Michigan electronically?

    It depends. If you have 250 or more income statements, you must use MTO to electronically send a magnetic media formatted file. Taxpayers with fewer than 250 income statements, may utilize any filing option listed in Treasury’s Income Statement Remittance Guide. Business taxpayers and their service providers who need to send state copies of income statements directly to Treasury are encouraged to do so electronically using MTO, regardless of the number of income statements to report

  • Should I send W-2s and/or 1099s with my Annual Return for Sales, Use and Withholding (SUW) Taxes?

    No. You may file the SUW Annual return via MTO or by mail. The annual return is due February 28. You must file income statements separately. View Treasury’s Income Statement Remittance Guide for W-2 and 1099 filing options. ​

  • Should I send W-2s and/or 1099s with a copy of my already filed Annual Return for Sales, Use and Withholding (SUW) Taxes?

    No. View Treasury’s Income Statement Remittance Guide for W-2 and 1099 filing options. ​

  • Does Michigan participate in the Combined Federal/State Filing (CF/SF) Program?

    Yes, CF/SF can be completed through the IRS’ Filing Information Returns Electronically (FIRE) System. 

  • What is Publication 1220 and how does it apply to filing income statements with Michigan?

    Publication 1220 is an annually updated Internal Revenue Service (IRS) document that provides guidance (including accepted forms and formats) on their electronic remittance process for magnetic media through their Filing Information Returns Electronically (FIRE) System. Taxpayers and service providers may use the layout or schema outlined in Publication 1220 to send magnetic media to Michigan.  

     

    In addition, certain income statements filed through the FIRE System will be automatically shared with Michigan through the Combined Federal/State Filing (CF/SF) Program. Taxpayers and service providers wishing to take advantage of this program must apply with the IRS.

  • What is EFW2 and how does it apply to filing income statements with Michigan?

    EFW2 is a type of electronic data file format used by employers and service providers to send W-2 forms to the federal Social Security Administration (SSA). Every year, the SSA publishes a document called “Specifications for Filing Forms W-2 Electronically (EFW2)”, which provides filing instructions and specifications on preparing data files in the EFW2 format. MTO’s EFW2 portal provides a way send Treasury a copy of the federal file and satisfy Michigan W-2 reporting requirements. Taxpayers and service providers wishing to take advantage of this program must apply with the SSA.

  • Am I required to file all income statements using a single method, or can I choose multiple filing options?

    It depends. If you have 250 or more income statements, you must use MTO to electronically send a magnetic media formatted file. Taxpayers with fewer than 250 income statements, may utilize any filing option listed in Treasury’s Income Statement Remittance Guide. Business taxpayers and their service providers who need to send state copies of income statements directly to Treasury are encouraged to do so electronically using MTO, regardless of the number of income statements to report.    

  • My business is not liable for business taxes in the State of Michigan. How do I file 1099 forms?

    Treasury accepts mailed state copies of income statements (no cover letter required) from taxpayers with fewer than 250 income statements to:

    Michigan Department of Treasury
    Lansing, MI 48930


Magnetic Media

  • What is magnetic media filing and who is required to use it?

    Magnetic media is a federal reporting schema developed to communicate W-2 and 1099 data without sending physical form copies. Treasury accepts the Internal Revenue Service’s Publication 1220 format and the federal Social Security Administration’s EFW2 format for magnetic media reporting. Each of these federal publications are updated annually.

    Treasury accepts income statement data in physical format for taxpayers with fewer than 250 income statements. Taxpayers issuing 250 or more income statements must use MTO to electronically send a magnetic media formatted file. Please refer to Form 447, Transmittal for Magnetic Media Reporting of W-2s, W-2Gs and 1099s for guidance on magnetic media.

  • What is Publication 1220 and how does it apply to filing income statements with Michigan?

    Publication 1220 is an annually updated Internal Revenue Service (IRS) document that provides guidance (including accepted forms and formats) on their electronic remittance process for magnetic media through their Filing Information Returns Electronically (FIRE) System. Taxpayers and service providers may use the layout or schema outlined in Publication 1220 to send magnetic media to Michigan.  

    In addition, certain income statements filed through the FIRE System will be automatically shared with Michigan through the Combined Federal/State Filing (CF/SF) Program. Taxpayers and service providers wishing to take advantage of this program must apply with the IRS.

  • What is EFW2 and how does it apply to filing income statements with Michigan?

    EFW2 is a type of electronic data file format used by employers and service providers to send W-2 forms to the federal Social Security Administration (SSA). Every year, the SSA publishes a document called “Specifications for Filing Forms W-2 Electronically (EFW2)”, which provides filing instructions and specifications on preparing data files in the EFW2 format. MTO’s EFW2 portal provides a way send Treasury a copy of the federal file and satisfy Michigan W-2 reporting requirements. Taxpayers and service providers wishing to take advantage of this program must apply with the SSA.

  • Which income statements may I file by magnetic media?

    Forms W-2, W-2C, W-2G, 1099-R, 1099-MISC, and 1099-NEC may be filed by magnetic media.

  • How do I send magnetic media to the State of Michigan?

    If you have 250 or more income statements, you must use MTO to electronically send a magnetic media formatted file. Taxpayers with fewer than 250 income statements, may send physical magnetic media, but business taxpayers and their service providers are encouraged to send income statements electronically using MTO, regardless of the number of income statements to report.   

    View Treasury’s Income Statement Remittance Guide for W-2 and 1099 filing options.

    Please refer to Form 447, Transmittal for Magnetic Media Reporting of W-2s, W-2Gs and 1099s for guidance on magnetic media.

  • How do I send magnetic media to the State of Michigan?

    If you have 250 or more income statements, you must use MTO to electronically send a magnetic media formatted file. Taxpayers with fewer than 250 income statements, may send physical magnetic media, but business taxpayers and their service providers are encouraged to send income statements electronically using MTO, regardless of the number of income statements to report.   

    View Treasury’s Income Statement Remittance Guide for W-2 and 1099 filing options.

    Please refer to Form 447, Transmittal for Magnetic Media Reporting of W-2s, W-2Gs and 1099s for guidance on magnetic media.

  • I am sending magnetic media through the mail. Which recording devices are accepted?

    Magnetic media should be recorded on CD-R or IBM 3480 or 3490 compatible tape cartridges. 

    Please refer to Form 447, Transmittal for Magnetic Media Reporting of W-2s, W-2Gs and 1099s for guidance on magnetic media.

  • I am mailing magnetic media; do I need to complete and send Form 447?

    Yes, complete page 1 of Form 447 and mail with your magnetic media.

  • I am sending electronic magnetic media; do I need to complete and send Form 447?

    No, Form 447 is only needed when mailing physical magnetic media.

  • I am required to file all income statements via magnetic media, or can I choose different filing methods for different income statements?

    It depends. If you have 250 or more income statements, you must use MTO to electronically send a magnetic media formatted file. Taxpayers with fewer than 250 income statements, may send physical magnetic media or utilize any other filing option listed in Treasury’s Income Statement Remittance Guide.  Business taxpayers and their service providers who need to send state copies of income statements directly to Treasury are encouraged to do so electronically using MTO, regardless of the number of income statements to report.    


1099-NEC

  • Do I need to report nonemployee compensation on Form 1099-NEC or can I continue using Form 1099-MISC?

    Historically, nonemployee compensation and other types of income, such as rents and royalties, have been reported to the IRS on Form 1099-MISC. Beginning with 2020 tax year, the IRS developed a new form to report nonemployee compensation, Form 1099-NEC. Per the IRS, Form 1099-MISC will continue to be used to report other types of income and withholding.

    Michigan follows federal guidelines regarding income statement forms and requires state copies of Forms W-2, W-2C, W-2G, 1099-R, 1099-MISC, and 1099-NEC where appropriate. View Treasury’s Income Statement Remittance Guide for W-2 and 1099 filing requirements.

  • Every year I e-file 1099 forms federally. The software I use informed me that I won't be able to e-file the state 1099-NEC form. Why did this happen and how can I send this information to Treasury?

    For the 2020 tax year, the IRS included Form 1099-NEC in Publication 1220 and the Filing Information Returns Electronically (FIRE) System. Normally, income statements accepted through the IRS’ FIRE System will be shared with Michigan through the Combined Federal/State Filing (CF/SF) Program. However, the IRS specifically indicated that although reporting positions and instructions were included for state and local reporting of Form 1099-NEC, this information will not be shared with states through the CF/SF Program.

    There are a number of ways to send the state copies of 1099-NEC directly to Michigan. View Treasury’s Income Statement Remittance Guide for W-2 and 1099 filing options.  

  • I created an MTO account, but I do not see where I can upload 1099-NEC forms. How can I send this information electronically?

    After you set up your personal MTO user profile, you have access to MTO web services. Click Sales, Use, and Withholding (SUW) Taxes under the Tax Services section of the MTO Homepage.

    To get to the area in MTO where you can send income statement information electronically, you will need to connect your personal profile to the Treasury-registered business tax account that issued the 1099 forms. View the Connect to a Business tutorial on the MTO Help Center to create this business relationship. Once connected, click the name of the business on the SUW Dashboard. Select Additional Services under SUW Actions and click Wage Statements. This MTO page is where you can upload 1099-NEC data; all accepted file formats and sizes are listed. Click Upload. Select the applicable tax year of the income statements and click Select a W2 File to choose a computer file. Click Upload to send the file to Treasury. You will receive a confirmation number.   


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