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CIT Filers: Short Tax Years

CIT Filers: Short Tax Years

Situational Explanation

Eligible Corporate Income Tax (CIT) filers with short tax years that end within the expense calendar year can still claim the Research and Development (R&D) Tax Credit for Michigan Qualified R&D Expenses (MQREs) incurred during that year.

To Claim the Credit

  • Submit the R&D Credit Application after January 1 following the expense year and before the application deadline for that expense year.
  • If the business’s annual return is due before Treasury publishes the Proration Notice (typically in April following the expense year), file an extension to determine the business’s claimable credit amount before filing the annual return.

Example

Corporation X is a calendar year Corporate Income Tax (CIT) filer claiming the Research and Development (R&D) Tax Credit for expense year 2026.

Corporation X’s short tax year ends July 15, 2026. It incurred MQREs from January 1 to July 15, 2026. These expenses can be claimed on its 2026 CIT annual return. However, Corporation X must wait until January 1, 2027 to submit its credit application and needs to file an extension to wait for the Proration Notice expected to be published in April 2027 before filing its return.