Emergency-related state tax relief available for taxpayers located in certain areas of Michigan impacted by severe weather.
MI-1040
MI-1040
Possible Reasons for Adjustments to Flow-Through Entity Tax Credit
Flow-Through Entity Has Not Filed Annual FTE Tax Return
Adjustment Reason
The flow-through entity from which you claimed a credit may not have filed their annual FTE tax return (Form 5772) or their return may not have been processed.
Steps to Remedy
Contact the flow-through entity to ensure they filed their return (including supporting Form 5774) and inquire whether it has been processed. The FTE taxpayer can call 517-636-6925 to inquire about the status of their return. Until the FTE tax annual return for the tax year ending with or within your tax year has been processed without adjustments, your claimed credit cannot be granted.
Credit Was Not Fully Funded by Deadline
Adjustment Reason
The credit was not fully funded by the deadline, which differs depending on the tax year of the electing flow-through entity. For tax years beginning 2021 through 2023, the flow-through entity’s deadline was the 15th day of the 3rd month after the flow-through entity’s tax year. For tax years beginning on and after 2024, the flow-through entity’s deadline is the due date of its annual return, including any extensions. Only a credit funded by that date can be claimed against the same tax year; any remaining credit must be claimed in a later tax year once it is funded.
Steps to Remedy
Contact the flow-through entity and ensure your records match their records, including the timing of their payments.
Credit Claimed Does Not Match Credit Allocated
Adjustment Reason
The amount of credit you claimed does not match the credit allocated to you by one or more flow-through entities on their annual return (specifically, Form 5774, Michigan Flow-Through Entity Tax Schedule for Reporting Member Information).
Steps to Remedy
Ensure you reported the identifying information and amount of credit for each flow-through entity from which you received a credit. Read guidance on tiered / indirect credits.
Contact the flow-through entity and ensure your records match their records as filed on their original or, if applicable, amended return. If your records match, the flow-through entity should contact the Business Taxes Division at Treas-FTE-Customer-Support@michigan.gov or 517-636-6925.
Treasury’s Business Taxes Division may have adjusted the FTE return or reported payments to match Treasury’s records. If the flow-through entity is not appealing those adjustments, ensure your credit is reported consistently with any Treasury corrections.
Not Identified by an Electing Flow-Through Entity as a Recipient of Credits Claimed
Adjustment Reason
You have not been identified by an electing flow-through entity as a recipient of one or more of the FTE tax credits you claimed. Your name or account number may not have been accurately reported on the FTE annual return (specifically, Form 5774, Michigan Flow-Through Entity Tax Schedule for Reporting Member Information).
Steps to Remedy
Contact the flow-through entity to ensure your records match theirs and if the flow-through entity needs to correct an error, the flow-through entity should file an amended return.
Incorrectly Reported Indirect or Tiered Credits
Adjustment Reason
You may have indirect/tiered credits and did not report them correctly. Read general FTE Tax frequently asked questions. If you do not directly own the entity that generated a credit you claimed, provide the name and account number of that credit-generating entity and the member flow-through entity (upper tier) through which the credit flowed.
Steps to Remedy
Respond to your notice as directed with the applicable documentation. Read Reporting to Members Templates for guidance and contact your flow-through entities as needed.
Fiduciary Return Indicates It Did Not Distribute Income to Beneficiaries
Adjustment Reason
The FTE tax credit claimed by a beneficiary of a fiduciary must be prorated by the ratio of the electing flow-through entity's income distributed to the beneficiary to the electing entity's total income included in the fiduciary's distributable net income. The fiduciary’s return (Form MI-1041) may indicate that it did not distribute any or all of the income to its beneficiaries; therefore, no credit or less credit may be claimed by the beneficiaries.
Steps to Remedy
Refer to FTE and Fiduciary Frequently Asked Questions.
Contact the trust or estate that reported an FTE credit to you. Ensure your records match their records regarding the proration of income and FTE credit from the electing flow-through entity.