The Michigan Income Tax Act requires that a person must make estimated tax payments quarterly if the person's income tax liability, after credits and withholding, will be $500 or more for the year.
Failure to file and make the required estimated tax payments may result in an assessment or bill for the penalty and interest being issued by the Michigan Department of Treasury.
The Michigan Department of Treasury follows the Internal Revenue Service (IRS) guidelines for estimated tax requirements. Based on the IRS estimated income tax requirements, to avoid penalties for failure to make estimated tax payments, 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 tax liability,
- or 110% of your previous year's tax liability if your previous year's adjusted gross income is more than $150,000 ($75,000 or more for married filing separate).
Farmers, fishermen and seafarers may have to pay estimates but they do have other filing options. For more information refer to the MI-1040 Instruction Booklet .
Penalty is 25% for failing to file estimated tax payments or 10% of underpaid tax per quarter. Interest is 1% above the prime rate.
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