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Did You Receive a Notice for Underpayment of Estimates?
Penalty and Interest for Underpayment of Estimates (MI-2210)
The Michigan Income Tax Act requires that a person must make quarterly estimated payments if the person's income tax liability, after applying credits and withholding, will be $500 or more for the year.
Taxpayers who failed to make required estimated payments, paid late, or underpaid in any quarter, may be charged penalty and interest. Penalty is 25 percent of the tax due (with a minimum of $25 per quarter) for failing to make estimated payments or 10 percent (with a minimum of $10 per quarter) for failing to make sufficient estimated payments or making estimated payments late. Taxpayers may be subject to penalty and interest even if they are due a refund when they file their income tax return.
Note: Taxpayers have the option to pay the total annual estimated tax by the first quarter due date of April 15 rather than making 4 quarterly payments.
The Michigan Department of Treasury follows the Internal Revenue Service (IRS) guidelines for estimated tax requirements. Based on the IRS estimated income tax requirements your total tax paid through credits and withholding must be:
- 90% of your current year's tax liability or
- 100% of your previous year's liability
- 110% of your previous year’s liability if your previous year’s adjusted gross income is more than $150,000 ($75,000 for married filing separate).
If you did not make the required estimated tax payments, file the Michigan Underpayment of Estimated Income Tax (Form MI-2210) to determine the amount of penalty and interest due. If you do not file an MI-2210, you may receive a Notice of Proposed Penalty and Interest for Underpaid Estimates.
Note: Extension payments are not considered estimate payments.
Special Rules for Farmers, Fishermen, and Seafarers
Farmers, fishermen and seafarers may have to make estimated tax payments, but other filing and payment options are available.
If at least two-thirds of your annual gross income is from farming, fishing, or seafaring, you may:
- Delay paying your first 2020 quarterly installment (MI-1040ES) until January 15, 2021, and pay the entire amount of your 2020 estimated tax due, or
- File your 2020 MI-1040 return and pay the entire amount of tax due on or before March 1, 2021.
If you filed and paid using one of the above options do not file the MI-2210 form.
Annualizing your Income
If you receive income unevenly during the year (e.g., from a seasonal business, capital gain, severance pay or bonus) you may annualize your income. Use the MI-2210 Annualized Income Worksheet to determine what quarter your payments are due.
Completing the Annualized Income Worksheet
You must annualize for the entire year by completing all four columns. Complete column A, lines 1-16 before completing column B etc.
- Line 1 must be the year-to-date total for each period in the appropriate column. Each column is an accumulating total and should include the amount from the previous column plus any additional income earned to date. The last column should equal the amount on your MI-1040, line 14.
Example: You earned $4,000 in the first three months of the year. You earned an additional $5,000 during April and May. Enter on Worksheet, line 1, $4,000 in the first column and $9,000 in the second column.
- Line 12 divide the amount from page 1 of the MI-2210 form, line 7 by four and enter the result in each column.
- Line 16 the sum of columns A-D should equal the amount from page 1 of the MI-2210 form, line 9.
Taxpayers who annualize must include 25 percent of their total tax withheld in each column of the MI-2210, line 10, or submit documentation to substantiate uneven income tax withholding.
You may choose to make your estimated income tax payments electronically instead of mailing a payment with the personalized form provided. Paying electronically is easy, fast and secure. Payment options include:
- eCheck by initiating an Automated Clearing House (ACH) payment from your checking or savings account, or
- payment by debit or credit card.
Mail Your Payment
If you choose to mail your payment, include the filer’s full Social Security number on the MI-1040ES voucher. Make your check or money order payable to “State of Michigan.” Print the last four digits of your Social Security number on the check or money order. Do not staple your payment to the voucher.
If paying on behalf of another filer, include the filer’s full Social Security number on the MI-1040ES voucher. Make your check or money order payable to “State of Michigan”. Print the filer’s name and last four digits of their Social Security number on the check or money order. Do not staple your payment to the voucher.
For accurate processing of your payment, do not combine this payment with any other payments. Send your check or money order with the MI-1040ES voucher. Do not staple your payment to the voucher.