Skip to main content

Employer Withholding Tax Frequently Asked Questions

General

  • Your address is updated based on your most recent return filing. 

    If you need to change your address and have already filed a return, use City of Detroit Notice of Change (Form 5439). Use this form only to change the mailing address or legal address of your business as it relates to your City of Detroit Corporate Income Tax and/or City of Detroit Income Tax Withholding. Discontinuance for these taxes is declared on the City of Detroit Income Tax Withholding Annual Reconciliation (Form 5321) and City of Detroit Corporate Income Tax Return (Form 5297).

  • Yes. If you would like to authorize the Michigan Department of Treasury to communicate with a named individual or entity acting on your behalf. See Authorized Representative Declaration (Form 151) for additional information.

  • Complete the Authorized Representative Declaration (Form 151) to authorize the Michigan Department of Treasury to communicate with a named individual or entity acting on your behalf. Please be aware that all information designated as "required" must be supplied for this authorization to be effective. Instructions for submission are included on page 2 of the form.

  • City of Detroit Taxes are not currently available on MTO.
  • 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 Federal Employer Identification Number. 

  • Sale or Discontinuance: An employer who sells, goes out of business or permanently ceases to be an employer must file Form W-2 and a City of Detroit Income Tax Withholding Annual Reconciliation (Form 5321) by the date the final withholding payment is due. You must indicate within Form 5321 the Date and Reason Code for Discontinuance. Do not use City of Detroit Notice of Change (Form 5439) to report a sale or discontinuance.     

Filing, Payments, Penalty and Interest

    • 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 has a withholding obligation if it has employees who work remotely (telecommute) from a location in Detroit.
    • If an employer, that does not otherwise have an obligation to withhold, voluntarily registers to withhold, the employer must withhold from all employees who are residents of Detroit.

    Note: 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.

  • 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.

  • 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.

  • 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.
  • 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.

    If the 15th falls on a holiday or weekend, the return is due on the next business day.

  • 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.

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

    Visit the Employer Withholding Tax Forms page to select Form 5321 for the appropriate tax year.

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

    Visit the Employer Withholding Tax Forms page to select Form 5321 for the appropriate tax year.

  • Yes, a return must be filed even if there is no tax liability for the period.
  • Yes, if submitting a payment after the due date, include the calculated penalty and interest in the payment amount. If penalty and interest is not included, you may receive a bill for any additional amount due. 
  • You will owe penalty and interest for late payment of tax if you pay after the due date.

    Penalty accrues monthly at 1 percent of the tax due, and increases by an additional 1 percent per month, or fraction thereof (e.g. penalty on a $500 tax due will be $30 if the tax is unpaid for six months).

    The interest rate is 1 percent above the adjusted prime rate and is adjusted on January 1 and July 1 of each year. Interest is charged from the original due date of the return to the date the balance of the tax is paid.  View current interest rate.

  • Michigan Department of Treasury
    P.O. Box 30812
    Lansing, MI 48909

    To ensure proper application of the payment, please follow all instructions provided on the return.

  • Michigan Department of Treasury
    P.O. Box 30812
    Lansing, MI 48909

    To ensure proper application of the payment, please follow all instructions provided on the return.

  • Payments cannot currently be made via telephone. Please see "How do I submit a payment?" for additional information.

  • Monthly/quarterly returns cannot be amended. The annual tax return will reconcile the account.
  • 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 Federal 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.

  • Sale or Discontinuance: An employer who sells, goes out of business or permanently cease to be an employer must file Form W-2 and a City of Detroit Income Tax Withholding Annual Reconciliation (Form 5321) by the date the final withholding payment is due. You must indicate within Form 5321 the Date and Reason Code for Discontinuance. Do not use City of Detroit Notice of Change (Form 5439) to report a sale or discontinuance.
  • Employer's errors of over or under withholding should be corrected as follows: 

    • If an error is discovered in the same period (month or quarter) in which it was made, the employer shall make the necessary adjustment in a subsequent payment. Only the corrected amount should be included in the return to the city;
    • If an error is discovered in a subsequent period of the same calendar year, the employer shall make the necessary adjustment on a subsequent payment and report it as an adjustment on the next return;
    • If an error is discovered in the following calendar year, the employer shall notify the City Income Tax Division of the Michigan Department of Treasury of the error by filing an amended Form 5321 including corrected W-2 Forms (W-2C), if applicable, and:

    - Pay any additional tax due; or 

    - Make a written request for refund of an overpayment including a specific explanation of the error.

    NOTE: Overpayments of withholding will not be credited toward tax due in future years.

    For additional information visit the Employer Withholding Tax forms page to view the City of Detroit Income Tax Withholding Guide (Form 5469) for the appropriate tax year.

  • If an error has occurred in the same tax year, see answer to "How do I correct errors on my City Income Tax Withholding Monthly/Quarterly Return (Form 5323)?"

    If an error has been discovered after the City of Detroit Income Tax Withholding Annual Reconciliation (Form 5321) has been filed, the employee will reconcile their annual withholding with the submission of their City Individual Income Tax Return. Any overpayment will be refunded and any determined liability with be the responsibility of the employee. 

Tax Clearance

  • For information about requesting a tax clearance, contact the City of Detroit at 313-224-3560 or visit the City of Detroit's Tax Clearance web site here.
  • The City of Detroit will provide you with the reason(s) for denial and the appropriate agency to contact for resolution.
    • City of Detroit Individual Income Tax Returns 2015-Present
    • City of Detroit Corporate Tax returns 2016-Present
    • City of Detroit Partnership/Estates and Trusts Income Tax returns 2016-Present
    • City of Detroit Withholding Monthly/Quarterly Returns and Annual Reconciliation 2017- Present
  • The City Tax Administration reports the tax returns that are and are not on file and/or any outstanding tax liabilities for your account to the City of Detroit. The City of Detroit is responsible for determining approval or denial of any tax clearance request. 
  • The City Tax Administration provides the City of Detroit with the current status of all items related to income tax filings and payments. The City of Detroit uses this, along with any other relevant information, to determine approval or denial of any tax clearance request.
  • If you are denied a tax clearance and submit payments and/or returns not previously on file. It may take up to 21 days for these items to be processed. This timeframe is standard for receipt of information for anyone submitting returns or payments by US mail. If you have a question about the receipt of returns or payments, you may visit Check My Tax Information or contact the City Tax  Administration by calling 517-636-5829.

  • When submitting returns or payments, follow the instructions provided on the form or voucher to ensure proper application and processing. If you have a question about the proper method for submitting a return or payment, contact the City Tax Administration by calling 517-636-5829.
  • If you were denied a clearance for not filing a return, but you don't believe you were required to file, you should contact the City of Detroit's Clearance team by email at cityofdetroitclearances@detroitmi.gov or by calling 313-224-3560 and selecting option 4.

  • If you have questions about an outstanding balance, contact the City Tax Administration at 517-636-5829.

W-2s

  • Form W-2 information may be submitted in paper format however, electronic submission of Form W-2 information is encouraged to reduce the occurrence of errors.  See Transmittal for Magnetic Media Reporting of W-2s, W-2Gs, and 1099s (Form 447) for additional instructions regarding electronic submission of Form W-2 information.

  • No. Submission of Form W-2 information in paper format is permissible, however, electronic submission of Form W-2 information is encouraged to reduce the occurrence of errors. When submitting W-2 Forms by paper, they must be included with the City of Detroit Income Tax Withholding Annual Reconciliation (Form 5321).

    Visit the Employer Withholding Tax Forms page to select Form 5321 for the appropriate tax year.

    See Transmittal for Magnetic Media Reporting of W-2s, W-2Gs, and 1099s (Form 447) for additional instructions regarding electronic submission of Form W-2 information.

  • Yes. See Transmittal for Magnetic Media Reporting of W-2s, W-2Gs, and 1099s (Form 447) for additional instructions regarding electronic submission of Form W-2 information.

  • No. You are not required to submit City of Detroit Form W-2s with your State of Michigan Form W-2s.

    If submitting electronically, City of Detroit Form W-2s may be submitted with State of Michigan Form W-2s. See Transmittal for Magnetic Media Reporting of W-2s, W-2Gs, and 1099s (Form 447) for additional instructions regarding electronic submission of Form W-2 information.

    If submitting paper Form W-2s, these must be attached to City of Detroit Income Withholding Annual Reconciliation (Form 5321).

    Visit the Employer Withholding Tax Forms page to select Form 5321 for the appropriate tax year.