The Michigan Department of Treasury 807 form is the Composite Individual Income Tax Return used by flow-through entities such as partnerships and S corporations doing business in Michigan. This form allows these entities to report income and tax obligations for nonresident members. It is crucial to complete and file this form accurately to avoid penalties and ensure compliance with state tax regulations.
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The Michigan 807 form, officially known as the Composite Individual Income Tax Return, is an essential document for certain businesses operating within the state. Specifically designed for flow-through entities like partnerships and S corporations, it allows these entities to file a single tax return on behalf of their nonresident members. The form must be completed accurately and submitted by April 15 following the tax year. It requires clear identification of the entity, including its name, federal identification number, and mailing address. The form also includes various income calculations, such as ordinary income, additions, and subtractions, which help determine the total Michigan income subject to taxation. Additionally, participants in the composite return must meet specific eligibility criteria, and the form mandates the attachment of several supporting documents, including federal tax returns and participant lists. Filing this form correctly is crucial, as failure to do so can lead to penalties and interest, as well as complications regarding the entity’s tax obligations.
Michigan Department of Treasury 807 (Rev. 1-05)
2004 MICHIGAN
Composite Individual Income Tax Return
This return is due April 15, 2005. Type or print clearly in blue or black ink.
This form is issued under authority of P.A. 281 of 1967, as amended. Failure to file may result in the assessment of penalty and interest and could result in the revocation of filing agreement.
1. Name of Partnership, S Corporation or Other Flow-Through Entity
2. Federal Employer Identification or TR Number
3. Mailing Address (Street, P.O. Box or Rural Route No.)
4. City, Village or Township
State
ZIP Code
NOTE: Pages 1, 2 and 3 of the U.S. 1065 or 1120S, the MI-1040H, a list of participants and a list of nonparticipants must be attached to this return. See instructions.
5.
Ordinary income (loss) from line 22 of U.S. 1065 or line 21 of U.S. 1120S
.00
6.
Additions (from line 35, page 2)
7.
Subtotal. Add lines 5 and 6
8.
Subtractions (from line 38, page 2)
9.
Total income subject to apportionment. Subtract line 8 from line 7
10.
Apportionment percentage from MI-1040H. (Caution! See instructions.)
%
11.
Total Michigan apportioned income. Multiply line 9 by the percentage on line 10
12.
Michigan allocated income or (loss) (from line 43, page 2)
13.
Total Michigan income. Add lines 11 and 12
14.
Enter Michigan income that is attributable to Michigan residents
15.
Enter Michigan income that is attributable to nonparticipating nonresidents
16.
Enter Michigan income that is attributable to participants
17.
Exemption allowance (from line 49, page 2)
18.
SEP, SIMPLE or qualified plan deductions (from line 52, page 2)
19.
Add lines 17 and 18
20.
Taxable income. Subtract line 19 from line 16
21.
Tax due. Multiply line 20 by 3.95% (.0395)
22.
Michigan extension payments and credit forward
23.
Withholding tax payments
24.If line 22 plus line 23 is less than line 21, enter TAX DUE.
Include interest
and penalty
, if applicable
PAY 24.
25.
If line 22 plus line 23 is more than line 21, enter overpayment
26.
Amount of line 25 to be credited to your 2005 estimated tax
27.
Subtract line 26 from line 25
REFUND 27.
CERTIFICATION
I declare under penalty of perjury that the information in this return and attachments is true and
I declare under penalty of perjury that this return is based on all
complete to the best of my knowledge. I have obtained the required Power of Attorney from each
information of which I have any knowledge.
of the members of this composite return and my firm will resolve the issue of any tax liability.
Preparer's Name, Address, PTIN and/or FEIN
Filer's Signature
Date
I authorize Treasury to discuss my return with my preparer.
Yes
No
Mailing: Make check payable to "State of Michigan." Write the firm's Federal Employer Identification Number, "Composite
Return" and Tax Year on the check. Mail return with payment (if applicable) to: Composite Return, Michigan Department of Treasury, P.O. Box 30058, Lansing, MI 48909.
www.michigan.gov/treasury
Continued on Page 2
2004 807, Page 2
Name of Partnership, S Corporation or Other Flow Through Entity
Federal Employer Identification or TR Number
ADDITIONS (see instructions)
28.
Net income (loss) from rental real estate activities
29.
Net income (loss) from other rental activities
30.
Portfolio Income (loss) (see instructions):
a. Interest income
30a.
b. Dividend income
30b.
c. Royalty income
30c.
d. Net short-term capital gain (loss) (from U.S. Schedule K)
30d.
e. Net long-term capital gain (loss) (from U.S. Schedule K)
30e.
f. Other portfolio income
30f.
31.
Net gain (loss) under Section 1231
32.
Other income from U.S. Schedule K
33.
State or local taxes measured by income
34.
Other miscellaneous additions (attach schedule)
35.
Total additions. Add lines 28 through 34. Enter here and on line 6
SUBTRACTIONS (see instructions)
36.
Income (loss) from other partnerships, S corp. and fiduciaries included in ordinary income
37.
Other miscellaneous subtractions (attach schedule)
38.
Total subtractions. Add lines 36 and 37. Enter here and on line 8
MICHIGAN ALLOCATED INCOME OR (LOSS)
39.
Guaranteed payments to participants for services performed in Michigan
40.
Income attributable to other Michigan partnerships, S corporations or fiduciaries
41.
Net Michigan capital gains (losses) (from U.S. Schedule D)
42.
Other Michigan allocated income (loss) (see instructions)
43.
Total Michigan allocated income (loss).
Add lines 39 through 42. Enter here and on line 12
EXEMPTION ALLOWANCE
44.
Number of participants included in this agreement
45.
Line 44 times $3,100 exemption allowance
46.
Total Michigan income from line 13
47.
Total distributive income (Total Distributive Income from Distributive Income Worksheet)
48.
Percent of income attributable to Michigan. Divide line 46 by line 47.
(May not exceed 100%.)
49.
Apportioned exemption allowance. Multiply line 45 by the percentage on line 48
Enter here and on line 17
SEP, SIMPLE OR QUALIFIED PLAN SUBTRACTIONS
50.
SEP, SIMPLE or qualified plan subtractions for participants (attach schedule)
51.
Enter the percent of income attributable to Michigan from line 48
52.
SEP, SIMPLE or qualified plan subtractions attributable to Michigan
Multiply line 50 by the percentage on line 51. Enter here and on line 18
2004 807, PAGE 3
Instructions for Form 807, Michigan Composite Individual Income Tax Return
GENERAL INSTRUCTIONS
Who may file a return
Aflow-through entity, defined as partnerships, S corporations, limited partnerships, limited liability companies, or limited liability partnerships, that does business in Michigan and has two or more nonresident partners, shareholders or members (participants). The entity (firm) and participants must agree to comply with the Michigan Department of Treasury (Treasury) rules described below.
Participation Requirements
A member may not participate in this composite return in any of the following cases:
•If he or she is claiming a city income tax credit, public contribution credit, community foundation credit, homeless shelter/food bank credit, college tuition credit or Michigan Historic Preservation Tax Credit.
•If he or she was a Michigan resident (full-year or part-year).
•If he or she wishes to claim more than one Michigan exemption.
Due date of return
The composite return for any tax periods ending in 2004 is due April 15, 2005. The returns for any periods ending in 2005 will be due April 15, 2006.
If the firm cannot file by the due date, a request for an extension can be filed before the original due date. See “Requesting an Extension” on this page.
Composite filers are required to make withholding tax payments on behalf of
all nonresident members (both participating and nonparticipating). The payment of withholding is due quarterly on April 20, July 20, and October 20 of the taxable year and January 20 of the succeeding year. The payment of withholding taxes is remitted on the payment voucher Form 160, Combined Return for Michigan Taxes.
Requesting an extension
The firm may request an extension of time to file by sending payment of the estimated annual liability to Treasury with a copy of an approved federal extension. Any extension allowed by the
Internal Revenue Service for filing the firm’s federal return automatically extends the due date of the composite return to the same extended due date.
If the firm does not apply for a federal extension, request an Application for Extension of Time to File Michigan Tax Returns (Form 4). When completing the extension form, check “Fiduciary Tax” in box 1, use the firm’s name and federal employer identification number (FEIN) and write “composite return” on the form. Follow these special instructions to make sure your account is credited properly.
Payment of the estimated annual liability
must be made with the extension application. When you file your composite return, attach a copy of your extension application to it. Obtain Form MI-1041ES
from www.michigan.gov/treasury, Fiduciary Forms. Download a copy of the quarterly forms and complete one quarterly form. Use the name of the firm and the firm’s FEIN or the recipients Social Security number (SSN). Check the box labeled “CF” at the top of the voucher. Do not use the other three quarterly estimate forms.
Mailing refunds, assessments and correspondence
By signing the Michigan Composite Income Tax Return (Form 807), the signing partner or officer declares that the firm has power of attorney from each participant to file a composite return on his or her behalf. Treasury will mail refund
checks, assessments and all correspondence to the firm at the address indicated on the return. The firm must agree to be responsible for the payment of any additional tax, interest and penalties as finally determined. Issues involving the tax liability reported on a composite return will be resolved with the firm. In unusual circumstances, the department may contact the participants.
Attachments
Attach the following items to the composite return:
•A copy of pages 1, 2 and 3 of the U.S. 1065 or U.S. 1120S .
•A Michigan Schedule of Apportion- ment (Form MI-1040H).
•All required forms MI-NR-K1 for each member of the composite return.
•Two schedules (one for participants and one for nonparticipants) listing each partner’s, shareholder’s or member's name, address, SSN and respective share of Michigan income and/or loss. If the participating member is another flow-through entity, the schedule must include the entity’s name, address, FEIN, and share of Michigan-sourced income, as well as a list of the names, addresses, SSNs and ownership percentages of that entity’s nonresident partners or shareholders.
•A statement signed by an authorized officer or general partner certifying that each participant has been informed of the terms and conditions of this program.
LINE-BY-LINE INSTRUCTIONS
Lines not listed are explained on the form.
Line 10: Enter the apportionment percentage from Form MI-1040H. DO NOT
use the Single Business Tax apportionment percentage from Form C-8000H. The MI-1040H apportionment percentage is NOT weighted and the property factors are based on property owned or rented and USED in Michigan. See MI-1040H instructions for income tax nexus standards.
Line 13: The amount on this line should equal the total of lines 14, 15 and 16.
Line 21: Multiply the amount on line 20 by 3.95 percent (.0395).
Line 23: Enter the amount of withholding tax payments made on behalf of participating members.
Flow-Through Entities. Flow-through entities are required to withhold Michigan income tax on the taxable income available for distribution to nonresident members.
The amount of withholding is calculated and remitted on a quarterly basis by multiplying the share of taxable income allocable to each member, adjusted for the allowable exemption amount for a quarter, times the income tax rate (4.0 percent through June 30, 2004 and 3.9 percent beginning July 1, 2004).
Aflow-through entity is also required to withhold Michigan income tax when one or more of the entity’s members is a
2004 807, PAGE 4
nonresident flow-through entity. The flow-through entity in Michigan shall withhold Michigan income tax from any such nonresident flow-through entity on behalf of all of the nonresident members.
Line 24: If line 22 plus line 23 is less than line 21, enter the balance of the tax due. This is the tax owed with the return. Enter any applicable penalties and interest in the spaces provided. Add tax, penalty and interest together and enter the total on this line. If balance due is less than $1, no payment is required. Make checks payable to “State of Michigan.” Write the firm’s FEIN, “Composite Return,” and the tax year on the front of the check. To ensure accurate processing of your return, send one check for each return type.
Line 27: Refund. Subtract line 26 from line 25. This is the refund. Treasury will not refund amounts less than $1.
Mail your completed return with payment (if applicable) to:
Composite Return
Michigan Department of Treasury
P.O. Box 30058
Lansing, MI 48909
Additions
Distributive Income Worksheet
Column A refers to Distributive Income categories from Schedule(s) K. Column B and C refer to lines on the U.S. 1065 Schedule K and U.S. 1120S Schedule K. Column D is the list of amounts that are added to arrive at total distributive income that is reported on Form 807, line 47.
A
B
C
D
U.S. 1065
U.S. 1120S
Distributive Income
Distributive Income Categories
Schedule K
Amounts
Ordinary income (loss) from trade or business
1
activity
Net income (loss) from rental real estate
2
Net income (loss) from other rental activity
3c
Portfolio income (loss):
Interest income
5
4
Dividend income
6a and 6b
5a and 5b
Royalty income
7
6
Net short-term capital gain (loss)
8
Net long-term capital gain (loss)
9a
8a
Guaranteed payments
Net gain (loss) under section 1231
10
9
Other income (loss)
11
TOTAL DISTRIBUTIVE INCOME
Add all amounts in Column D and carry total to Form 807, line 47.
Lines 28 through 32: Enter income from lines 2, 3c, 4, 5a, 5b, 6, 7, 8a, 9 and 10 of 1120S Schedule K and from lines 2, 3c, 5, 6a, 6b, 7, 8, 9a, 10 and 11 of U.S. 1065 Schedule K. Guaranteed payments, income attributable to other Michigan fiduciaries or flow-through entities should be allocated to Michigan on lines 39 through 42. See instructions below.
Line 33: Enter the amount of state and local income taxes that was used to determine ordinary income on line 22 of the U.S. 1065 or line 21 of the U.S. 1120S.
Line 34: Enter other additions to income, such as gross interest and dividends from obligations or securities of states and their political subdivisions other than Michigan.
Subtractions
Note: Charitable contributions and other amounts reported as itemized deductions on U.S. SCHEDULE A are not allowable subtractions in determining Michigan taxable income.
Line 36: Enter income (loss) from other fiduciaries or other flow-through entities that is included in ordinary income. Losses must be added back to ordinary
income. Attach a schedule showing the location of companies and amount of income attributable to each.
Line 37: Enter amounts such as interest from U.S. obligations that are included in line 30a, and other deductions for AGI (above the line) that were not included in determining ordinary income. This includes section 179 depreciation and amounts included on line 12[d][2] of U.S. 1120S Schedule K and on line 13[d][2] of U.S. 1065 Schedule K. Attach a schedule of all subtractions.
Michigan allocated income or loss
Line 39: Enter the portion of guaranteed payments attributable to services performed in Michigan by the nonresident participants.
Line 40: Enter income from other fiduciaries or other flow-through entities attributable to Michigan that have not been reported on another composite return. Attach a schedule showing the amount of income attributable to each.
Line 41: Enter gains/losses from the sale of real or personal property located in Michigan not subject to apportionment.
Line 42: Enter any other income (loss) allocated to Michigan. Include any Michigan net operating loss deduction (NOLD). Partnerships may include the Section 179 expenses on property located in Michigan as a deduction here. Attach schedules.
Exemption Allowance
Line 47: Enter the total distributive income as determined using the worksheet on this page.
Line 48: Compute the percentage of income attributable to Michigan by dividing total Michigan income (line 46) by the total distributive income (line 47). This figure may not exceed 100 percent.
SEP, SIMPLE or qualified plan subtractions
SEP - Simplified Employee Pensions
SIMPLE - Savings Incentive Match Plan for Employees
Line 50: Figure the portion of SEP, SIMPLE or qualified plan subtractions which is attributable to the participants. Attach a schedule showing calculations.
Filling out the Michigan 807 form requires careful attention to detail. This form is essential for partnerships, S corporations, and other flow-through entities operating in Michigan. Completing it accurately ensures compliance with state tax regulations and helps avoid potential penalties. Below are the steps to guide you through the process of filling out the form.
After completing these steps, ensure that you have all necessary attachments and that the form is mailed before the due date. This diligence will help you meet your tax obligations in Michigan without complications.
The Michigan 807 Form, also known as the Composite Individual Income Tax Return, is a tax return specifically designed for flow-through entities such as partnerships and S corporations. This form is required for entities that conduct business in Michigan and have two or more nonresident partners or shareholders. It allows these entities to file a single return on behalf of their nonresident members, simplifying the tax process for all parties involved.
Eligibility to file the Michigan 807 Form is limited to flow-through entities, which include partnerships, S corporations, limited partnerships, limited liability companies, and limited liability partnerships. However, not all members can participate in this composite return. Exclusions apply if a member:
The due date for the Michigan 807 Form is April 15 of the year following the tax year. For example, the return for tax year 2004 was due on April 15, 2005. If the entity is unable to meet this deadline, it may request an extension by submitting the appropriate payment and documentation to the Michigan Department of Treasury.
When submitting the Michigan 807 Form, several attachments must be included to ensure the return is processed correctly. These attachments include:
The tax on the Michigan 807 Form is calculated based on the taxable income reported. To determine the tax due, follow these steps:
If the total withholding and estimated payments exceed the tax due, the entity may be eligible for a refund.
Failure to file the Michigan 807 Form by the due date may result in penalties and interest being assessed. Additionally, it could lead to the revocation of the filing agreement with the Michigan Department of Treasury. It is crucial for entities to adhere to the filing deadlines to avoid these consequences.
Incomplete Information: Failing to provide all required details, such as the name of the partnership or the Federal Employer Identification Number (FEIN), can lead to processing delays.
Incorrect Apportionment Percentage: Using the wrong apportionment percentage, such as that from the Single Business Tax, can result in inaccurate tax calculations.
Missing Attachments: Not attaching necessary documents like pages from the U.S. 1065 or 1120S can cause the return to be considered incomplete.
Failure to Sign: Neglecting to sign the return can lead to it being rejected or delayed. The signature certifies the accuracy of the information provided.
Errors in Calculations: Simple math mistakes in calculating taxable income or tax due can result in overpayment or underpayment of taxes.
Ignoring Deadlines: Missing the filing deadline, which is April 15 for the 2004 tax year, can lead to penalties and interest on unpaid taxes.
Inaccurate Participant Information: Providing incorrect details about participants, including names and Social Security Numbers (SSNs), can complicate the return and lead to compliance issues.
The Michigan Department of Treasury 807 form is a composite individual income tax return used by flow-through entities such as partnerships and S corporations. When filing this form, several other documents may also be required or beneficial for a complete submission. Below is a list of forms and documents that are often used alongside the Michigan 807 form.
Using these forms and documents in conjunction with the Michigan 807 form can help ensure a complete and accurate filing. It is advisable to review all requirements carefully to avoid potential issues with the Michigan Department of Treasury.
The Michigan 807 form, which is a composite individual income tax return for flow-through entities, shares similarities with the IRS Form 1065. Both forms are designed for partnerships and other entities that pass income directly to their partners or members. The IRS Form 1065 captures the income, deductions, gains, and losses of the partnership, while the Michigan 807 form focuses on the state tax implications for the same entities. Each form requires detailed reporting of income and distributions, ensuring that tax obligations are met at both federal and state levels.
Another document that resembles the Michigan 807 form is the IRS Form 1120S. This form is specifically for S corporations and serves a similar purpose as the 1065 for partnerships. Like the Michigan 807, the Form 1120S allows S corporations to report their income, deductions, and credits. Both forms require accurate reporting of the income that flows through to shareholders, ensuring that each entity complies with tax regulations while also providing a clear picture of the income attributed to individual members.
The MI-1040H form is also similar to the Michigan 807 form, as it pertains to the apportionment of income for individual income tax purposes. This form is used by individuals and entities to determine how much of their income is taxable in Michigan versus other states. The Michigan 807 form relies on the MI-1040H to calculate the apportionment percentage, making it essential for flow-through entities to complete both forms accurately to ensure compliance with state tax laws.
Form MI-NR-K1 is another related document, as it provides information about the income allocated to nonresident members of flow-through entities. Similar to the Michigan 807 form, MI-NR-K1 ensures that nonresident participants are taxed appropriately on their share of income generated in Michigan. Both forms require detailed information about each participant's share, making it crucial for accurate tax reporting and compliance.
The IRS Schedule K-1 is akin to the MI-NR-K1 and is used for reporting income, deductions, and credits from partnerships and S corporations to their partners or shareholders. Just like the Michigan 807 form, the Schedule K-1 provides a breakdown of each member's share of the entity's income, ensuring that all participants are aware of their tax liabilities. This helps maintain transparency and compliance with tax regulations at both federal and state levels.
Form 160, the Combined Return for Michigan Taxes, is another document that shares similarities with the Michigan 807 form. This form is used for reporting various types of taxes owed by businesses in Michigan, including corporate income tax and sales tax. While the Michigan 807 focuses specifically on the income tax obligations of flow-through entities, both forms require careful calculations and reporting to ensure compliance with state tax laws.
Additionally, the Michigan Individual Income Tax Return (MI-1040) is relevant as it is the form individuals use to report their personal income tax. While the Michigan 807 form is specific to partnerships and S corporations, the MI-1040 serves as the final destination for income reported on the composite return. Individuals receiving income from flow-through entities will ultimately report this income on their MI-1040, highlighting the interconnected nature of these forms.
Finally, the Application for Extension of Time to File Michigan Tax Returns (Form 4) is important for those needing extra time to file their tax returns, including the Michigan 807 form. This document allows taxpayers to request an extension, ensuring they can meet their tax obligations without incurring penalties. Both the extension form and the Michigan 807 require careful attention to detail, as they are critical components of the tax filing process for flow-through entities in Michigan.
When completing the Michigan 807 form, attention to detail is crucial. Here are ten essential dos and don'ts to guide you through the process:
Following these guidelines can help ensure a smoother filing process and minimize the risk of issues with your tax return.
Misconception 1: The Michigan 807 form is only for corporations.
Many people believe that only corporations need to file the Michigan 807 form. In reality, this form is designed for flow-through entities, which include partnerships, S corporations, and limited liability companies. If your entity has two or more nonresident partners or shareholders, you need to use this form.
Misconception 2: Filing the Michigan 807 form is optional.
Some think that filing the Michigan 807 form is optional for flow-through entities. However, it is mandatory if your entity meets the requirements. Failing to file can lead to penalties, interest, and potential issues with your filing agreement.
Misconception 3: You don’t need to attach any documents when filing.
It’s a common misunderstanding that the Michigan 807 form can be submitted alone. In fact, you must attach several documents, including pages from the U.S. 1065 or 1120S, a Michigan Schedule of Apportionment, and lists of participants and nonparticipants. These attachments are crucial for accurate processing.
Misconception 4: The due date for the form is the same every year.
Many people assume the due date for the Michigan 807 form is always the same. The due date can change based on the tax year. For example, returns for tax periods ending in 2004 were due by April 15, 2005. Always check the specific due date for the year you are filing.
Misconception 5: You can ignore tax payments if you file the 807 form.
Some believe that filing the Michigan 807 form means you don’t have to worry about tax payments. This is incorrect. You must calculate and report any tax due on the form. If your withholding tax payments and other credits do not cover the tax due, you need to pay the balance. Ignoring this can lead to penalties.
Filling out the Michigan 807 form is an important process for partnerships, S corporations, and other flow-through entities. Here are key takeaways to keep in mind:
Understanding these key aspects can help ensure compliance and facilitate a smoother filing process for the Michigan 807 form.