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2. What is a composite return?

A Michigan Composite Individual Income Tax Return (Form 807) is a collective individual income tax filing for two or more participating nonresident members filed by the flow-through entity (FTE). This form is used to report and pay individual income tax under Part 1 of Public Act 281 of 1967, as amended. An intermediate FTE may elect to participate on behalf of its nonresident members, if its ultimate owner(s) can be identified**. Participation in a composite return will eliminate the need for an individual ultimate owner to file a Michigan Individual Income Tax Return (Form MI-1040), when the ultimate owner has no other Michigan-sourced income. 

A C corporation or an entity that files federally as a C corporation is not eligible to participate in the composite return.

This return is not an entity-level filing for tax imposed on the FTE.

** Limitations may apply on an intermediate FTE’s ability to participate in another FTE’s composite return if the intermediate FTE elected to pay Michigan flow-through entity tax. See Flow-Through Entity (FTE) Tax Credit FAQs.