Michigan Mi 2210 Form – Fill Out and Use This PDF

Michigan Department of Treasury

UNDERPAYMENT OF ESTIMATED INCOME TAX

Issued under the authority of the Income Tax Act of 1967, as amended. Attach to your MI-1040 or MI-1041.

Round all money items to whole dollars.

1. For 1998 or taxable year beginning _______________, 1998 and ending ________________, 19______.

MI-2210

1998

Taxpayers who receive income unevenly during the year (for example, from a seasonal business, capital gain, severance pay or bonus) may benefit by completing this worksheet. If you use this method, you must annualize for the entire year by completing all four columns.

If you choose to annualize your income, you must attach this worksheet and a completed MI-2210 to your tax return (see General Instructions, next page.)

As you complete the worksheet remember the following.

Line 1 must be the year-to-date total for each period in the appropriate column. Each column is an accumulating total and should include the amount from the previous column plus any additional income earned to date. The last column should equal the amount on your MI-1040, line 13.

Example: You earned $5,000 in the first three months of the year. You earned an additional $4,000 during April and May. Enter on worksheet line 1, $5,000 in the first column and $9,000 in the second column.

Each entry on worksheet line 12 will be MI-2210, Part 1, line 8 divided by four regardless of how the income is earned. If you add worksheet line 16 across the columns, the sum should equal the total shown on MI-2210, line 8.

Taxpayers who annualize must also enter 25 percent of tax withheld in each column of the MI-2210, line 10 or submit documentation to substantiate uneven distribution of withholding.

Use this form to see if you owe penalty and interest for failing to make estimated payments or for underpaying the estimated tax due. You can be charged interest (and possibly penalty) if your payment was low or late in any quarter. This is true even if you are due a refund when you file your tax return. The interest and penalty are figured separately for each due date. So you could still owe interest and penalty even if you made up an earlier underpayment with an overpayment later.

Because this is a complicated form, you may choose to have Treasury compute your interest and penalty and send you a bill instead of filing the form yourself. If you want Treasury to figure your interest, complete your MI-1040 form as usual, leaving the interest line blank and do not attach form MI-2210. Interest computed on this form and penalty charged for failing to file or underpaying estimates will be the same regardless of whether you pay with your return or if Treasury bills you.

If you annualize your income, you must complete the MI-2210 form and the annualization worksheet, and attach them to your Michigan annual tax return (individual or fiduciary). Individual income tax filers must check the box on MI-1040, line 34a and enter the amount of interest computed on that line. Fiduciary income tax filers must check the box on MI-1041, line 25 and enter the amount of interest computed on that line.

You may avoid penalty and interest and should not file this form if:

1.You had no tax liability for 1997 (if you had to file), or you were not required to file a 1997 return and your 1997 federal tax return was for a full 12 months.

2.The total tax on your 1998 return minus the amount you paid in withholding and all your credits is $500 or less.

3.The amounts of tax withheld and timely estimated tax payments made in equal installments equal at least 90 percent of the tax due in 1998 or 100 percent of the tax due in 1997, unless the installment due in any period is paid later than the due date of that installment.

Special rules for farmers, fishermen and seafarers.

Do not file this form if BOTH of these apply:

1.Your gross income from farming, fishing or seafaring is at least 2/3 of your annual gross income for 1997 or 1998, AND

2.You filed your MI-1040 and paid the entire tax due by March 2, 1999.

If you need to file estimated tax, request a 1999 Michigan estimated income tax formset (MI-1040ES for individuals, MI-1041ES for fiduciaries), by calling 1-800-FORM-2-ME (367-6263). Forms are also available from your local Treasury field office.

Before completing Part 1, add MI-1040 lines 29, 30 and 31. Subtract this sum from MI-1040, line 25. If the result is $500 or less, do not complete this form. For MI-1041 subtract line 21 from line 20. If the result is $500 or less, do not complete this form.

FISCAL-YEAR FILERS: Change due dates and interest rates to correspond with your tax year.

Part 1. FIGURING THE UNDERPAYMENT

Line 5: Figure your 1997 tax from your 1997 return. On the MI-1040 form, subtract the sum of lines 30 and 31 from line 25 and enter here. Fiduciaries, enter the amount from MI-1041, line 20.

Line 6: Figure your 1998 tax. On the MI-1040 form, subtract the total of lines 29 and 30 from line 25 and enter here. Fiduciaries, enter the amount from MI-1041, line 20.

Line 9: If you did not receive your income evenly throughout the year, you may annualize your income. See the instructions and worksheet on this form. The sum of the four installments must equal the lowest of:

•90 percent of the tax shown on your 1998 tax return, OR

•100 percent of the tax shown on your 1997 tax return.

Line 10: Enter the estimated tax payments you made plus any withholding. Note:

•One-fourth of your total withholding is considered paid on each due date unless you can document the dates the tax was withheld.

•An overpayment from 1997 that has been credited forward to 1998 will be applied to the first installment.

•Do not enter extension payments on this form.

In column A, enter the estimated tax payments made by April 15, 1998 that were for the 1998 tax year. In column B, enter payments made after April 15 and through June 15, 1998. In column C, enter payments made after June 15 and through September 15, 1998. In column D, enter payments made after September 15 and through January 15, 1999. Extension payments or other payments received after January 15 are not considered estimate payments.

Part 2. FIGURING THE INTEREST

The MI-2210 computes interest to April 15, 1999 or the date of payment, whichever is earlier. This part of the form breaks down underpayments to the payment period they are due, then gives the interest rate for that period. Interest is figured for the number of days the installment remained unpaid. All payments are applied to any underpayment first, regardless of when the payment is received. The balance (if any) is applied to the next period.

Lines 10-22: Complete all of these lines for column A before going to column B, etc. You need only complete each column to the date the payment was made. If the total underpayment for any payment period was not paid off with one payment, you may need to do several calculations in each column.

Example: Your tax due each period is $2,000. You have an underpayment of $1,000 for the first period (due April 15). On June 10 you send $2,000 to pay the second installment. But, $1,000 of this payment goes toward your $1,000 underpayment first. Interest is computed on $1,000 from April 15 to June 10 (56 days). The remaining $1,000 is applied to your second installment payment, creating a second period underpayment of $1,000. Interest will continue to accrue on this $1,000 until another payment is received.

Interest rates are set by Treasury twice each year for six-month periods starting January 1 and July 1. The rate is 1 percent above the prime rate in Michigan.

For example, if the Michigan prime rate is 10.2 percent, your interest rate for completing the MI-2210 is 11.2 percent for that six-month period. For current

interest rates, request REVENUE ADMINISTRATIVE BULLETIN

1998-2.

Part 3. FIGURING THE PENALTY

Penalty is 25 percent of the tax due for failing to file estimated payments, or 10 percent for failing to pay enough with your estimates or paying late.

Line 23: The underpayment for the penalty charge is figured in the same general way as the under- payment for interest.

Exceptions:

•Payments are applied in the quarter they are received.

•If an overpayment occurs in any quarter, the overpayment amount is carried forward to the next quarter and applied as a timely payment.

•Payments are not carried back to offset underpayments in previous quarters.

The amount on line 23 cannot be less than zero (0).

Line 24: Enter 25 percent if estimated tax payments were not made for 1998. Enter 10 percent if estimated tax payments were made for 1998.

Example: In the example in Part 2, the $2,000 payment received on June 10 is applied to the $2,000 required payment in the second quarter. The penalty in the first quarter is $100 (10 percent of the $1,000 underpayment in the first quarter). The penalty in the second quarter would be zero (0).