Current through Vol. 24-04, March 15, 2024
Rule 15.
(1) The
income tax deducted and withheld from compensation under chapter 7 of Act No.
281 of the Public Acts of 1967, as amended, is allowed as a credit against the
income tax of the person from whose wages the tax was withheld. Credit shall be
given to the employee even though such tax has not been paid to the department
by the employer.
(a) Example 1. An employee
received compensation of $15,000.00 from his employer for the year. The
employer withheld tax of $500.00 from the employee and furnished him with a W-2
wage and tax statement showing $500.00 withheld. The department shall give the
employee credit for tax withheld of $500.00.
(b) Example 2. The employer paid his
employees by check and withheld tax from each payment of wages. Each check
contained a stub which itemized all deductions. One of the deductions was
headed "Michigan Tax." The employees did not have W-2 wage and tax statements
to attach to their individual income tax returns because the employer did not
give the employees the statements. The employees shall receive credit against
the tax established by their individual income tax returns for all tax they can
prove was withheld. A copy of each check stub shall be accepted as evidence of
the tax withheld unless the department can prove otherwise. If the employee
cannot support his claim for tax withheld by W-2 wage and tax statements or
check stubs, he shall file an employee complaint form with his income tax
return.
(2) If a
taxpayer files individual income tax returns on any basis other than a calendar
year basis, the tax deducted and withheld during any calendar year is allowed
as a credit against the income tax on the person from whose wages the tax was
withheld for the taxable year which begins in such calendar year. If the person
from whose wages the tax was withheld has more than 1 taxable year beginning in
that calendar year, the credit shall be allowed against the tax for the last
taxable year beginning in such calendar year.
(a) Example 1. A man and his wife own a
business and file their individual income tax return, MI-1040, on a fiscal year
basis ending June 30th. They made 4 estimated payments totaling $700.00 toward
their tax liability for their year ending June 30, 1976. The husband also
worked for another business and the employer withheld $325.00 tax from his
compensation for calendar year 1975. The tax liability of the husband and wife
established by the MI-1040 for fiscal year ending June 30, 1976, was $1,100.00.
The taxpayer should take credit for the $700.00 estimated payments made for the
fiscal year ending June 30, 1976, plus the $325.00 tax the husband's employer
withheld during calendar year 1975. They must pay $75.00 with the MI-1040 when
they file.
(b) Example 2. The
situation in this example is the same as in example 1 except the husband worked
from January 15, 1976, to May 31, 1976, for the employer but did not work for
him during calendar year 1975. The husband and wife cannot claim the $325.00
tax the employer withheld from the husband's compensation in 1976 on their
MI-1040 for fiscal year ending June 30, 1976, and must pay $400.00 at the time
they file their annual return, MI-1040. They must take credit for the $325.00
tax withheld in 1976 on their MI-1040 for the year ending June 30,
1977.
(c) Example 3. After filing
his 1976 tax return on a calendar year basis, a taxpayer decides to change his
filing to a fiscal year basis using the fiscal period of July 1 to June 30. He
must file a return for the period of January 1, 1977, to June 30, 1977, and pay
the tax. He shall not receive credit for the tax withheld during that period.
When filing his full year return for the fiscal period July 1, 1977, to June
30, 1978, he shall report his income for the last 6 months of 1977 and the
first 6 months of 1978 and shall receive credit for the full amount of tax
withheld during calendar year 1977. The 1977 W-2 wage and tax statement shall
be attached to the return.
Figure for 206.15
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