3. Is a composite return required?

No; a Michigan Composite Individual Income Tax Return (Form 807) is optional.  A flow-through entity may file a composite return on behalf of its nonresident members who elect to participate**. If a flow-through entity does not file a composite return, each individual member must file a Michigan Individual Income Tax Return (Form MI-1040), Michigan Nonresident and Part-Year Resident Schedule (Schedule NR), Michigan Additions and Subtractions (Schedule 1), and all other applicable schedules for a complete Michigan filing.

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