Michigan Individual Income Tax Declaration for e-file

Individual Income Tax Declaration for e-file
Michigan tax Preparer Handbook for Electronic Filing - Individual Income Tax
Michigan Department of Treasury
3015 (11-20)

Michigan Tax Preparer Handbook
for Electronic Filing

2020
Individual Income Tax E-file
(includes City of Detroit e-File)

Michigan Department of Treasury
www.MIfastfile.org

Table of Contents
SECTION 1.

GENERAL INFORMATION .................................................................... 4

1.1.

Important Information......................................................................................... 4

1.2.

E-mail LISTSERV for Tax Professionals............................................................ 4

1.3.

State Return Self Service Options ..................................................................... 4

1.3.1

Internet Options............................................................................................ 5

1.3.2

Telephone Options ....................................................................................... 5

1.3.3

City of Detroit Return Self Service Options................................................... 5

SECTION 2.

INDIVIDUAL INCOME TAX E-FILE........................................................ 6

2.1.

Benefits of Individual Income Tax E-file ............................................................. 6

2.2.

Introduction ........................................................................................................ 7

2.3.

Important Information for Tax Year 2020 ........................................................... 7

2.4.

New for Tax Year 2020 ...................................................................................... 8

2.4.1

Forms and Instructions ................................................................................. 8

2.4.2

New Legislation, Revenue Administrative Bulletins (RAB) and Directives.... 9

2.5.

E-File Return Paper Copy.................................................................................. 9

2.6.

E-file Mandate.................................................................................................... 9

2.7.

City of Detroit Individual Income Tax Returns.................................................... 9

2.8.

Identity Theft ...................................................................................................... 9

2.9.

Pension Benefits.............................................................................................. 10

2.10. Form 1099-R Distribution Code ....................................................................... 10
2.11. Filing Extension for Military Personnel Serving in a Combat Zone .................. 10
2.12. Business, Rental, and Royalty Activity Worksheet........................................... 11
2.13. General Information ......................................................................................... 11
2.14. Key Dates and Reference Information ............................................................. 11
2.14.1 Michigan Income Tax E-file Calendar for Tax Year 2020 ........................... 11
2.14.2 Acknowledgment System ........................................................................... 11
2.14.3 State Program Description ......................................................................... 12
2.15. Publications ..................................................................................................... 12
2.16. 1040 MeF Program .......................................................................................... 13
2.17. How Fed/State/City Linked E-file Works .......................................................... 13
2.18. How State Unlinked E-file Works ..................................................................... 13
1

2.19. Application and Acceptance Process............................................................... 14
2.19.1 Who May Participate .................................................................................. 14
2.20. Michigan Portion of the Electronic Return........................................................ 15
2.20.1 Electronic Michigan Returns....................................................................... 15
2.20.2 Michigan PDF Attachments ........................................................................ 16
2.20.3 Exclusions from E-file ................................................................................. 19
2.20.4 Nonelectronic Portion of Michigan Returns ................................................ 20
2.21. Michigan E-file Signature Process ................................................................... 21
2.21.1 Fed/State and/or City Linked Returns......................................................... 21
2.21.2 State and/or city Unlinked Returns ............................................................. 21
2.21.3 Declaration of Taxpayer ............................................................................. 21
2.21.4 Corrections to Form MI-8453...................................................................... 22
2.21.5 Volunteer Groups ....................................................................................... 22
2.22. Important Reminders for Michigan Return Preparation.................................... 22
2.22.1 Direct Deposit ............................................................................................. 22
2.22.2 Preparer Notes ........................................................................................... 22
2.23. Transmitting the Michigan Electronic Return ................................................... 23
2.23.1 Acknowledgment of Electronic Returns ...................................................... 23
2.23.2 Status Codes Received from Treasury....................................................... 24
2.24. Tax Refund and Payment Information ............................................................. 24
2.24.1 State Tax Due Returns ............................................................................... 25
2.24.2 City Tax Refunds ........................................................................................ 26
2.24.3 City Tax Due Returns ................................................................................. 26
2.25. Responsibilities of Electronic Filers, Transmitters, and ERO’s ........................ 26
2.25.1 ERO or Tax Preparer.................................................................................. 27
2.25.2 Transmitter ................................................................................................. 27
2.25.3 Program Compliance.................................................................................. 27
2.25.4 Timeliness of Filing..................................................................................... 27
2.25.5 Changes on the Return .............................................................................. 27
SECTION 3.

DIRECT DEPOSIT .............................................................................. 28

3.1.

Benefits of Direct Deposit ................................................................................ 28

3.2.

General Information about Direct Deposit........................................................ 28

3.3.

Limitations of Direct Deposit ............................................................................ 30
2

SECTION 4.

DIRECT DEBIT ................................................................................... 31

4.1.

Benefits of Direct Debit .................................................................................... 31

4.2.

General Information about Direct Debit............................................................ 31

4.3.

Limitations of Direct Debit ................................................................................ 32

4.4.

Form 5472, Direct Debit of Individual Income Tax Payment ............................ 32

3

SECTION 1.
1.1.

GENERAL INFORMATION

Important Information

Michigan electronic filing (e-file) publications and forms are available on Michigan
Department of Treasury’s (Treasury) Web site at www.MIfastfile.org. For questions about
the e-file program contact Forms Documentation and E-file Services (FDES).
E-File Web Site .......................................................www.MIfastfile.org
E-File Coordinator...................................................Scott Bunnell
Testing and File Specifications ...............................Heather Vellanti
E-Mail......................................................................MIFormsEfile@michigan.gov
Treasury Web Sites ................................................www.michigan.gov/taxes
www.michigan.gov/treasury
www.michigan.gov/iit
www.michigan.gov/citytax
www.michigan.gov/identitytheft
Treasury does not recommend sending account-specific information over the Internet.
Federal and State disclosure laws require that taxpayer privacy and confidential records
be protected. Therefore, Treasury will not send account-specific information over the
Internet in response to an e-mail inquiry.
FDES staff is unable to provide return status information or address specific account
issues. Should an error occur on the Michigan return during processing, Treasury will
communicate directly with the filer through the regular error resolution process. Treasury’s
Customer Contact staff will discuss return situations with the preparer if the appropriate
authorization box has been completed on the return.

1.2.

E-mail LISTSERV for Tax Professionals

The Treasury Tax Professional LISTSERV is a free service that disseminates mass e-mail
messages within seconds to all subscribers. Sign up to receive electronic
communications on Treasury’s e-file programs and other information of interest. To
subscribe or for additional information, visit the Tax Preparer’s Web site at
www.MIfastfile.org.

1.3.

State Return Self Service Options

Treasury offers a variety of services designed to assist taxpayers and most are available
24 hours a day, seven days a week. To obtain information about an account using the
Internet and Telephone Options listed below, the following information from the return is
needed:

4

•
•
•
•

Social Security number (SSN) of the primary filer
Tax year of the return
Adjusted gross income (AGI) or total household resources
Filing status

1.3.1 Internet Options
Visit www.michigan.gov/incometax to find the following information:
•
•
•
•
•
•
•

Current year forms and instructions
Answers to many tax preparation questions
Most commonly used tax forms
Free assistance in preparing tax returns
Retirement, Pension, Interest, Dividends, Capital Gain Estimators
Pay tax due on the MI-1040, and make quarterly estimated income tax and
individual income tax extension payments
Other tax resources

Select “Check Your Tax Refund Status” to:
•
•
•
•
•

Check the status of a return
Check estimated payments made during the year
Check the status of letters sent to Treasury
Change an address
Ask a specific question about an account

The secure Web site was designed specifically to protect personal tax information.

1.3.2 Telephone Options
Treasury’s Automated Information Service 517-636-4486 phone system for State
returns is used to:
•
•
•
•

Request the status of a refund
Check the status of a letter sent to Treasury
Request information on estimated payments
Order current tax year forms

1.3.3 City of Detroit Return Self Service Options
Treasury’s City of Detroit Income Tax Administration 517-636-5829.
Forms, instructions, and additional information is available at www.michigan.gov/citytax.

5

SECTION 2.
2.1.

INDIVIDUAL INCOME TAX E-FILE

Benefits of Individual Income Tax E-file

Expanded services offered. E-file is a valuable addition to a tax preparer’s list of client
services, which can mean more clients. In addition, prospective clients can find an
authorized e-file provider at www.irs.gov.
Faster refunds for e-file returns. E-filed returns are processed faster than paper returns.
Allow 14 days before checking the status of the Michigan e-filed return by visiting
www.michigan.gov/iit and clicking on “Your Tax Refund Status.” Clients can also choose
direct deposit and have their State refund deposited directly into their account at the
financial institution of their choice. Clients can check the status of their City of Detroit
e-filed return by visiting www.michigan.gov/citytax.
Payment with tax due returns. Payment on a tax due return can be made using direct
debit at the same time the tax return is e-filed. Filers can even select the date the payment
will be debited from their account (up to 90 days, but not beyond the due date).
Improved return accuracy. Treasury processes the same data the tax preparer enters
into the computer. When e-filing federal, State and City of Detroit returns together, much
of the same data is used so information is entered only once, again lessening the
possibility of error. Treasury computers automatically check returns for mistakes. When
easy-to-fix mistakes, like math errors or missing forms are found, the return is sent back
for correction. The error can then be fixed and sent back to Treasury which prevents a
simple mistake from holding up a refund.
Detailed error conditions. Modernized e-file (MeF) business rules pinpoint the location
of the error in the return and provide complete information in the acknowledgement file
that is passed back to the transmitter. MeF business rules use simple wording to clarify
each error that triggers a rejection. Treasury will provide up to ten business rule errors
per return. For a complete listing of the e-file business rules and their description, visit the
Tax Preparer’s Web site at www.MIfastfile.org.
Increased customer satisfaction. Only tax preparers and their clients see the return.
Tax information is encrypted and transmitted directly to the IRS and then retrieved by
Treasury. An acknowledgment is sent to verify the return was received by Treasury and
accepted for processing.
Prior Year Returns. Michigan and City of Detroit tax returns for 2018, 2019 and 2020 will
be accepted during the 2021 processing year.
Portable Document Format (PDF) attachments. MeF accepts PDF attachments with
e-filed returns. See Section 2.20.2 for more information on attachments that will be
accepted by Michigan.

6

2.2.

Introduction

Treasury partners with the IRS to provide e-filing of IIT returns. The Federal/State
(Fed/State) e-file Program enables taxpayers to e-file both federal and State (including
City of Detroit) returns through tax preparers as part of the program’s effort to provide
“one-stop shopping” for tax preparation and filing. The State and/or City unlinked e-file
Program enables taxpayers to e-file their State and/or City of Detroit return separately
from the federal return.
E-filing is the most efficient way to file your federal, State and City of Detroit IIT returns.
The IRS and Treasury will begin accepting 2020 returns in January 2021 and encourage
taxpayers to use e-file and direct deposit as the fastest way to receive their refunds.

2.3.

Important Information for Tax Year 2020

State and City Tax Rates
Michigan Tax Rate ....................................................................... 4.25%
City of Detroit Resident Tax Rate................................................. 2.4%
City of Detroit Nonresident Tax Rate ........................................... 1.2%
State and City Exemptions
Personal Exemption..................................................................... $4,750
Special Exemption for Disabled ................................................... $2,800
Qualified Disabled Veteran Deduction ......................................... $400
Stillbirth Exemption ...................................................................... $4,750
City of Detroit Exemption Allowance ............................................ $600
Pension Deduction
Single Filer
Born before 1946: private pension limit........................................ $53,759
Born in 1946-1952: Standard deduction against all income† ....... $20,000
Born in 1953: Standard deduction election .................................. $20,000 against all
income or Social
Security, Military
compensation,
Michigan National
Guard retirement
benefits and
railroad retirement
7

benefits included in
AGI
Born after 1953, pension not deductible*† ................................... $0
Jointly Filed
Born before 1946: private pension limit........................................ $107,517
Born in 1946-1952: Standard deduction against all income†....... $40,000
Born in 1953: Standard deduction election .................................. $40,000 against all
income or Social
Security, Military
compensation,
Michigan National
Guard retirement
benefits and
railroad retirement
benefits included in
AGI
Born after 1953, pension not deductible*† ................................... $0
Senior Interest, Dividend, and Capital Gains
Single Filer (not available for senior born after 1945) .................. $11,983
Jointly Filed (not available for senior born after 1945) ................. $23,966
* Exception: Taxpayers in Tier 3 who receive pension benefits from employment with
governmental agencies not covered by the Social Security Act, review instructions for
Form 4884, line 28 and 29.
† Taxpayers

who receive benefits from a deceased spouse, see “Retirement Benefits
from a Deceased Spouse” and “Retirement Benefits Election for Tier 2 and Tier 3
Surviving Spouses” in the MI-1040 instruction booklet.

2.4.

New for Tax Year 2020

2.4.1 Forms and Instructions
Updated forms and instructions can be found on Treasury’s tax form search website.

8

2.4.2 New Legislation, Revenue Administrative Bulletins (RAB) and
Directives
•
•

2020 PA 65 Treatment of Pension Subtraction for Surviving Spouses
Taxpayer Protection Act

For information on new legislation, RABs and directives, visit www.michigan.gov/taxes.
Select “Individual Income Tax” and “Reports and Legal” tab for a list of resources.

2.5.

E-File Return Paper Copy

Treasury has seen an increase in the volume of both returns and e-file payment vouchers
with masked or truncated SSNs and bank account number information. Taxpayers have
been mailing the masked copy of their documents instead of the copy with the full account
information displayed. Tax preparers should emphasize with their customers the
importance of not mailing the masked copies as that will lead to delays in processing of
their returns.

2.6.

E-file Mandate

To optimize operational efficiency and improve customer service, Treasury mandated
e-filing of IIT returns.
Tax preparers who complete 11 or more IIT returns are required to e-file all eligible
returns. Software developers producing tax preparation software or computer-generated
forms must support e-file for all Michigan and City of Detroit IIT forms that are included in
the software package.

2.7.

City of Detroit Individual Income Tax Returns

City of Detroit returns are included as part of the Michigan return and is covered under
the IIT e-file mandate. Tax preparers who complete 11 or more IIT returns are required
to e-file all eligible returns. Software developers producing tax preparation software or
computer-generated forms must support e-file for all Michigan and City of Detroit IIT forms
that are included in their software package.
When transmitting the return as a State/City submission only one acknowledgment will
be issued. Both the Michigan and City of Detroit return must pass schema validation and
e-file business rules to receive an accepted acknowledgment.

2.8.

Identity Theft

Michigan, along with many other state revenue agencies, requests additional information
to combat stolen-identity tax fraud to protect taxpayers and their tax refund. If they have
a driver’s license or state issued identification card, please provide the requested
information from it. Providing the information could help process their return more quickly.

9

The return will not be rejected if they do not have a driver’s license or state-issued
identification.
Tax-related identity theft occurs when someone uses the taxpayer’s Social Security
number to file a tax return claiming a fraudulent refund. Victims of tax-related identify theft
can assist the Treasury by following the steps listed below:
•
•

Paper file the return and include all required schedules.
Send copies, not originals, of the following documents:
o Federal return and schedules (if applicable).
o Identity theft affidavits (if applicable).
o Government issued photo identification
o W-2’s and/or 1099’s.

Even if the above steps are followed, Treasury may require additional identity verification
and taxpayers may be asked:
• To complete an identity confirmation quiz, which is a tool Treasury uses to assist
in the protection of taxpayers against tax-related identity theft.
• To provide additional supporting documentation as needed.
Visit www.michigan.gov.identifytheft for more information regarding tax-related identity
theft.

2.9.

Pension Benefits

See the MI-1040 instruction booklet posted on Treasury’s tax form search website.

2.10. Form 1099-R Distribution Code
The codes for pension subtractions from box 7 of Form 1099-R must be included in the
federal record information and on the Michigan Pension Schedule (Form 4884).
Distribution Code 1 (Early Distribution) are not qualifying retirement and pension benefits
and are not eligible to be reported on Form 4884.

2.11. Filing Extension for Military Personnel Serving in a Combat Zone
United States military personnel serving in a combat zone on the due date, will be given
180 days after leaving the combat zone to file their federal and State tax returns and will
be exempt from penalties and interest. When e-filing, service men and women serving in
combat zones should enter the words “Combat Zone” in the preparer notes. Military
income earned from service in a combat zone must be included in total household
resources. While military income earned from service in a combat zone is not included in
AGI, it must be included in total household resources for the property tax and home
heating credits. This includes income in boxes 1 and 12 of the W-2. Visit
www.michigan.gov/taxes for more information.

10

2.12. Business, Rental, and Royalty Activity Worksheet
Treasury has made available a sample worksheet, titled Business, Rental, and Royalty
Activity Worksheet (Worksheet), that allows taxpayers a means to identify the location of
Michigan and non-Michigan business activity and rental activity. The Worksheet also
allows other non-business income to be identified as Michigan or non-Michigan. The
Worksheet is a suggested attachment and can be used by those who e-file or mail their
return. The Worksheet, or any similar worksheet that identifies the type and location of
non-Michigan business activity and income, may be attached as a PDF file to an e-filed
return using the file name “BusinessActivity.pdf.” The Worksheet or similar worksheet
may also be attached to any paper filed return. The Worksheet is not a required
attachment, however submitting the Worksheet could reduce the need for further
correspondence to obtain information required to process the return and avoid delays.
The Worksheet can be obtained at www.michigan.gov/iit.

2.13. General Information
Information from the W-2 and 1099 form is entered in the software and transmitted with
the e-file return. W-2 and 1099 forms should not be mailed to Treasury. The
Withholding Tax Schedule (Schedule W) and City Withholding Tax Schedule (City
Schedule W) should be provided to the taxpayer with the printed copy of the return.

2.14. Key Dates and Reference Information
2.14.1 Michigan Income Tax E-file Calendar for Tax Year 2020
E-file Return Acceptance Period ....................................... Identical to the IRS
Begin Transmitting 1040 MeF Returns
to the IRS and Treasury.................................................... Identical to the IRS
Michigan IIT e-File Payment Due
(MI-1040-V and City-V) ..................................................... April 15, 2021
Deadline to Transmit Home Heating Credit Claim
(MI-1040-CR-7)................................................................. September 30, 2021
Deadline to Transmit Michigan Returns
Electronically..................................................................... Identical to the IRS

2.14.2 Acknowledgment System
IRS State Acknowledgment System ................................. 1-866-255-0654
or www.irs.gov

11

2.14.3 State Program Description
Type of e-file Program ...................................................... Fed/State (linked) and
State and/or City (unlinked)
Number of State Taxpayers .............................................. 5 million
Fed/State e-file Returns (2019)......................................... 4.4 million
Average State Refund (2019) ........................................... $639.01
Direct Deposit
State Return ................................................................ Yes (Not applicable
on amended returns)
City of Detroit............................................................... No
Direct Debit/Automatic Fund Withdrawals
State Return ................................................................ Yes (Not applicable
on amended returns)
City of Detroit............................................................... Yes
Warehouse Direct Debit Payments.............................. Yes, for 90 days, but not
beyond the due date.
Michigan Signature Required
Fed/State (linked) ........................................................ No
State (unlinked) ........................................................... Yes

2.15. Publications
The following publications provide information for tax professionals participating in the
Fed/State e-file program.
IRS Publications and Forms: www.irs.gov
Form/Pub.
Pub. 4163
Pub. 4164
Pub. 3112
Pub. 4557
Pub. 4600
9325

Title
Handbook for Authorized IRS e-file Providers of Individual Income Tax
Returns
Modernized e-File Guide for Software Developers and Transmitters
IRS e-file Application and Participation
Safeguarding Taxpayer Data Guidelines
Safeguarding Taxpayer Information
Acknowledgment and General Information for Taxpayers Who File
Returns Electronically

12

Treasury Publications and Forms: www.MIfastfile.org
Form/Pub.
Pub. 3015
MI-8453
MI-1040-V
City-V

Title
Michigan Tax Preparer Handbook for Electronic Filing
Michigan Individual Income Tax Certification for Electronic Filing
Michigan Individual Income Tax Payment Voucher
City Individual Income Tax e-file Payment Voucher

2.16. 1040 MeF Program
Tax preparers and transmitters accepted into the IRS e-file program may participate in
the 1040 Fed/State e-file Program and e-file the State and/or City of Detroit return through
the MeF program.
Michigan accepts two kinds of submissions:
•
•

Fed/State (linked)
State and/or City of Detroit (unlinked)

2.17. How Fed/State/City Linked E-file Works
Tax preparers and transmitters accepted into the IRS Fed/State 1040 MeF Program may
file federal, state and/or City of Detroit returns together in one transmission to the IRS
Service Center. The state and/or City of Detroit submission can be linked to the IRS
submission by including the IRS SubmissionId of the federal return. If the state and/or
City submission is linked to an IRS submission (also referred to as the Fed/State return),
the IRS will check to see if there is an accepted IRS SubmissionId. If there is not an
accepted federal return, the IRS will deny the state and/or City submission and a rejection
acknowledgment will be sent to the transmitter. Treasury has no knowledge that the state
return was denied (rejected) by the IRS. If there is an accepted federal return under the
IRS SubmissionId, MeF will perform minimal validation on the state and/or City
submission. The state and/or City data will then be made available for retrieval by
Treasury. After the state and/or City data is retrieved, it will be acknowledged and, if
accepted, processed by Treasury.
Note: The IRS recommends if a state submission is linked to an IRS submission, to send
the IRS submission first, and after it has been accepted, send in the state submission.

2.18. How State Unlinked E-file Works
The federal return does not have to be e-filed and accepted before e-filing the state
unlinked return. However, the federal tax return should be computed before computing
the Michigan and/or City of Detroit tax return.
Tax preparers and transmitters accepted in the IRS e-file program may participate in the
state and/or City unlinked e-file program when supported by their software. If the
Electronic Return Originator (ERO) does not link the state and/or City return to a
13

previously accepted federal return (also referred to as State Standalone return), the IRS
will perform minimal validation on the state and/or City return. If the return passes
validation, the state and/or City submission will then be made available for retrieval by
Treasury. After the state and/or City submission is retrieved, it will be acknowledged and,
if accepted, processed by Treasury.
Treasury will acknowledge receipt of all returns retrieved from the IRS. The transmitter
should receive the Michigan acknowledgment within three days from the date the return
is successfully transmitted to the IRS.
When filing a combined Michigan and City of Detroit return, both the State and City of
Detroit return must be accepted to receive an “Accepted” acknowledgment. If an error
occurs in either the State or City of Detroit return, both returns will be rejected.
All returns, whether e-filed or paper-filed, are subject to Treasury audit and can be
delayed regardless of the acknowledgment code received. Returns are processed
and refunds are issued daily.

2.19. Application and Acceptance Process
2.19.1 Who May Participate
Tax preparers and transmitters accepted into the IRS MeF program may participate in
Michigan 1040 e-file program and e-file Michigan Individual Income Tax and/or City of
Detroit returns through the MeF program. The IRS mandates preparers filing 11 or more
returns to e-file those returns, with minor exceptions. Michigan would expect any preparer
e-filing federal returns to also e-file the Michigan and/or City of Detroit returns.
To participate, applicants must first apply to the IRS and be accepted. Individuals must
register with IRS e-Services and create a new (or revised) IRS e-file application.
Individuals can contact the IRS e-help toll-free at 1-866-255-0654 for assistance.
Publication 3112 IRS e-file Application and Participation specifies the application process
and requirements for federal participation. The definitions used by the IRS of the various
categories of electronic filers, EROs, transmitters, or software developers also apply for
Michigan e-filing purposes.
Once accepted into the IRS e-file program, participation in Michigan’s e-file
program is automatic. Michigan will use the Electronic Filing Identification Number
(EFIN) assigned by the IRS. Michigan does not assign any additional identification
numbers.
IRS regulations require paid tax preparers to use Preparer Tax Identification Numbers
(PTINs) for all tax returns and refund claims. Visit the IRS Web site at www.irs.gov for
more information.
To participate in Michigan’s Fed/State and State and/or City of Detroit unlinked e-file
programs, e-filers must use software that has successfully completed the IRS and
14

Michigan Assurance Testing System (ATS). Confirm that the software chosen has been
approved for Michigan and/or City of Detroit and the Treasury e-file program is operational
before transmitting returns.
If, after acceptance, a tax preparer/transmitter or software company has production
problems, Treasury reserves the right to suspend that tax preparer or software company
until the problems are resolved to Treasury’s satisfaction.
Treasury may conduct a suitability check on applicants who have been accepted in the
Fed/State e-file program. Participation in the program may be denied if a company is not
registered to conduct business in Michigan, or if there is an outstanding tax liability with
Michigan.
A list of approved software companies is available on Treasury’s Web site. Tax preparers
are not required to file test returns with Michigan.

2.20. Michigan Portion of the Electronic Return
The Michigan portion of an electronic return consists of data transmitted electronically
and the supporting paper documents. The paper documents contain information that
cannot be transmitted electronically.

2.20.1 Electronic Michigan Returns
Michigan e-file will support the following 2020 IIT forms and schedules:
Form
3174
4013
4642
4884
4973
4976
5049
5472
5530
5678
MI-1040
MI-1040CR
MI-1040CR-2
MI-1040CR-5
MI-1040CR-7
MI-1040D

Title
Direct Deposit of Refund
Resident Tribal Member Annual Sales Tax Credit
Voluntary Contributions Schedule
Michigan Pension Schedule
Pension Continuation Schedule
Home Heating Credit Claim MI-1040CR-7 Supplemental
Married Filing Separately and Divorced or Separated Claimants
Schedule
Direct Debit of Individual Income Tax Payment
Amended Return Explanation of Changes (Schedule AMD)
Michigan Signed Distribution Statement for Joint Owners of
Farmland Development Rights Agreements
Michigan Individual Income Tax Return
Homestead Property Tax Credit Claim
Homestead Property Tax Credit Claim for Veterans and Blind
People
Farmland Preservation Tax Credit Claim
Home Heating Credit Claim
Adjustments of Capital Gains and Losses
15

Form
MI-1040H
MI-2210
MI-4797
MI-8949
Schedule 1
Schedule MI-1045
Schedule CR-5
Schedule NR
5118
5119
5120
5121
5253
5338

Title
Schedule of Apportionment (e-file limited to six occurrences)
Underpayment of Estimated Income Tax
Adjustments of Capital Gains and Losses from Sales of Business
Property
Sales and Other Dispositions of Capital Assets
Additions and Subtractions
Michigan Net Operating Loss
Schedule of Taxes and Allocation to Each Agreement
Michigan Nonresident and Part-Year Resident
City of Detroit Resident Income Tax Return
City of Detroit Nonresident Income Tax Return
City of Detroit Part-Year Resident Income Tax Return
City of Detroit Withholding Tax Schedule (City Schedule W)
City Withholding Tax Schedule Continuation Schedule
City Underpayment of Estimated Income Tax

2.20.2 Michigan PDF Attachments
Following is a list of IIT forms, line references, and filing conditions where PDF
attachments are accepted by Michigan.
Form
State Returns

Line

City Returns
All Forms
All Forms
All Forms
All Forms and
Lines

MI-1040

9d

MI-1040

18

MI-1040

Description
Power of
Attorney
Power of
Attorney
MI-1310
Letter of
Authority
Death
Certificate
Explanation.
Must include
the form and
line number
reference.
Certificate of
Stillbirth from
MDHHS
Other State
Returns
Grantor Letter

File Name
POA.pdf

Required
No

CityPOA.pdf

No

MI1310.pdf
LetterOfAuthority.pdf

No
No

DeathCertificate.pdf

No

Explanation.pdf

No

CertificateOfStillbirth.pdf

Yes

OtherStateReturn.pdf

No

GrantorLtr.pdf

No

16

Form
MI-1040
MI-1040CR-5

Line
26

MI-1040
MI-1040CR-5

26

MI-1040CR
MI-1040CR-2
MI-1040CR-5
MI-1040CR
MI-1040CR-2
MI-1040CR-7
MI-1040CR

10
10
22
21
24

Schedule 1
Schedule NR
Schedule 1

10

Description
Worksheet to
allow claimants
to identify
percentages
they can claim
for a farmland
preservation
tax credit.
A breakdown of
the taxable
value and
property taxes
for the
farmland
preservation
tax credit.
Property Tax
Statement

File Name
FarmlandK1.pdf

Required
No

Assessor.pdf

No

PropertyTaxStatement.pdf

No

Custodial Party
End of Year
Statement
Letter from the
landlord stating
the portion of
monthly
payment that
constitutes
rent, or if not
available, the
prorated share
of property
taxes
Business
Activity
Worksheet
Supporting
statement
when claiming
subtraction for
when income
from U.S.
obligations
exceeds
$5,000

FEN851.pdf

No

SpecialHousingStmt.pdf

No

BusinessActivity.pdf

No

USObligationsDetail.pdf

No

17

Form
Schedule 1

Line
11

Schedule 1

21

Schedule 1

24

Schedule 1

28

MI-1040H

12

MI-1045

18

5119

Part
5

5121

Part
3

5119
5120

28
23

Description
Claiming a
subtraction of
taxable railroad
retirement
benefits. This
can include
income from
the RRB-1099
and/or
RRB-1099R.
Claiming
Michigan
subtraction for
federal
Schedule R but
not required to
include
Schedule R
with federal
return.
Tier 3 Standard
Deduction
Worksheet
Prior Year NOL
Documents
Unitary
Calculation
NOL
Worksheet
Finance
Director
Approval Letter
Employer
Letter and
Work Log
Explanation.
Employee
Business
Expenses

File Name
RRB1099R.pdf

Required
No

FedSchR.pdf

No

StandDedTier3Wksht.pdf

No

PriorYrNOLDocuments.pdf

No

UnitaryCalculation.pdf

Yes

NOLWksht.pdf

No

ApprovalLetter.pdf

Yes

EmployerLetter.pdf

No

EmployeeBusinessExpenses.pdf

No

18

2.20.3 Exclusions from E-file
The taxpayer is not eligible for MeF for tax year 2020 if:
Form
Line(s) Description
Various
Filing federal returns or forms excluded in MeF.
All Michigan
Filing prior year return(s) for tax year 2017 or prior.
Forms
MI-1040
19
Claiming the Historic Preservation Tax Credit (Form 3581).
Schedule 1
23
Claiming the Tier 2 Standard Deduction and has received
benefits from SSA exempt employment, has retired as of
01/01/2013, and was born 01/01/1954.
Schedule 1
23
Claiming both the Michigan Standard Deduction (line 23 or line
24
24) and the dividend/interest/capital gain deduction (line 26) as
26
the unremarried surviving spouse of someone born before 1946
who was at least 65 at the time of death.

Schedule 1

25

Schedule 1

25

Schedule 1 25
Form 4884
7d
Schedule 1 25
Form 4884
29
MI-1040CR,
CR-2
or
MI1040CR-7
MI-1040CR-5 8
MI-1040CR-7

13b

MI-8949
MI-8949
MI-4797

1
3
2

MI-4797

10

MI-4797

19

Filing and claiming the Tier 3 Michigan Standard Deduction on
line 24 with a birthdate of January 1, 1954.
Claiming a pension/retirement subtraction using Form 4884
when the oldest of filer or spouse is born in 1953 and died during
the tax year before reaching age 67.
Claiming a pension/retirement subtraction using Section D of
Form 4884 when the oldest of the filer or spouse is born
January 1, 1959.
Claiming the pension/retirement subtraction as a surviving
spouse who qualifies to check box 7d and was born 01/01/1954.
Claiming a pension/retirement subtraction using Section D of
Form 4884 when the taxpayer is required to reduce the deduction
limit due to railroad or military benefits subtracted on Schedule
1, line 11.
Filing an amended credit-only return.
Using different total household resources than on the
MI-1040CR, MI-1040CR-2, or MI-1040CR-7.
Claiming more Deaf/Disabled/Blind exemptions than the total
personal, child and dependent adult exemptions.
Filing with more than 36 short-term capital gains/losses.
Filing with more than 48 long-term capital gains/losses.
Filing with more than 16 sales/exchanges of property held more
than one year.
Filing with more than 13 ordinary gains/losses of property held
one year or less.
Filing with more than 17 gains from disposition of property under
Sections 1245, 1250, 1252, 1254 and 1255.
19

Form
MI-1040H
5121

Line(s) Description
12
Filing with more than 28 entities unitary with one another for
which combining apportionment.
Part 2
Reporting City Tax Paid by A Partnership

2.20.4 Nonelectronic Portion of Michigan Returns
The nonelectronic portion of the Michigan return consists of the following supporting
documents:
Form
Form 4*
Form 5029*
MI-1040ES*
Form 5123*
MI-1040-V
City-V

MI-8453
Form 5472
MI-1310

MI-1040CR-5

Description
Application for Extension of Time to File Michigan Tax Returns
Application for Extension of Time to File City Tax Returns
Michigan Estimated Individual Income Tax Voucher
CITY Estimated Individual Income Tax Voucher
Michigan Individual Income Tax e-file Payment Voucher
• State tax due returns must submit payment by the due date. For
other payment options see Section 2.24.
City Income Tax e-file Payment Voucher
• City tax due returns must submit payment by the due date.
Form City-V should only be used for e-file payments. For other
payment options see Section 2.24.
Michigan Individual Income Tax Certification for e-file
• See Section 2.21 for additional information regarding the MI-8453.
Michigan Direct Debit of Individual Income Tax
• Form 5472 provides the taxpayer with a copy of their direct debit
request entered in the electronic return submission.
Claim for Refund Due a Deceased Taxpayer
• Michigan will accept e file returns for deceased taxpayers. If a
U.S. 1310 is required, that data must be included within the
federal folder of the Michigan e-file return.
• When e-filing on behalf of a single, deceased taxpayer, with a
balance due federal return and a refund Michigan return, the
Michigan return can be e-filed and the U.S. 1310 or the MI-1310
(and required document) included as a PDF attachment when
supported by the software or mailed to Treasury.
Farmland Preservation Tax Credit Claim
• The signed statement to Treasury was removed from the
MI 1040CR-5. Form 5678, Signed Distribution Statement for Joint
Owners of Farmland Development Rights Agreements, should be
used for farmland returns claiming unequal distribution of property
taxes on jointly owned land and must have a distribution statement
be signed by all owners.
• Do not mail a copy of Form 5678 or the signed statement to
Treasury. A copy of the signed statement should be retained to
avoid reduction and/or denial of the credit. Treasury may request
20

Form
Form 5327
PDF
Attachments

Description
at a later date a copy of the signed statement to verify the unequal
distribution claimed.
City of Detroit Business Income Apportionment Schedule
• Form 5327 is used when claiming more than one occurrence of
business income apportionment on Form 5119 or Form 5120.
PDF attachments (when not supported by software)
• For a list of PDF attachments, see Section 2.20.2.

* If the taxpayer makes either the extension payment, estimated payments or tax due
payments electronically, there is no need to mail the identified form to Treasury.

2.21. Michigan E-file Signature Process
2.21.1 Fed/State and/or City Linked Returns
Treasury will accept the federal signature method (Self-Selected Personal Identification
Number (PIN) or Practitioner PIN). Michigan does not require any additional signature
documentation. If the taxpayer chooses to complete Form MI-8453, Treasury
recommends the tax preparer retain it for six years. Do not mail Form MI-8453 to
Treasury.

2.21.2 State and/or city Unlinked Returns
State and/or City unlinked returns can be signed using “shared secrets” or Form MI-8453
signature document. Shared secrets consist of the SSN(s), previous year’s AGI or total
household resources, and the previous year’s tax due or refund amount. If Form MI-8453
is used, the tax preparer should retain a copy of Form MI-8453. Form MI-8453 should not
be mailed to Treasury.
The AGI or total household resources and refund or tax due amount must be from the
previous year’s return. Treasury can accept this information from the original return,
amended return, or return as corrected by Treasury.
If the return is signed by using shared secrets and the return is rejected because the
shared secrets do not match, the taxpayer/tax preparer may correct the shared secrets
information and retransmit. There is no limit on how many times the return can be
retransmitted in this circumstance.

2.21.3 Declaration of Taxpayer
After the return has been prepared and before the return is transmitted electronically, the
taxpayer (and spouse, if a joint return) must verify the information on the return and sign
and date Form MI-8453. The tax preparer or transmitter must provide the taxpayer with a
copy of the form. Tax preparers and EROs are prohibited from allowing taxpayers to sign
a blank Form MI-8453. Form MI-8453 may also be used by tax preparers as a signature
document to retain for their records.
21

2.21.4 Corrections to Form MI-8453
If the tax preparer or transmitter makes changes to the electronic return after the filer has
signed Form MI-8453 but before the data has been transmitted, the tax preparer or
transmitter must have the filer complete a corrected Form MI-8453 if the following
conditions apply:
•
•

Federal AGI differs from the amount on the electronic return by more than $25.
The Michigan or City of Detroit refund changes by more than $5.

Nonsubstantive changes are permissible on Form MI-8453, provided the tax preparer or
the person making the corrections initials the changes.

2.21.5 Volunteer Groups
If a taxpayer chooses to complete Form MI-8453, it should not be mailed to Treasury.
Volunteer tax preparers must provide taxpayers with the MI-8453 and instruct them to
retain a copy with their tax records

2.22. Important Reminders for Michigan Return Preparation
2.22.1 Direct Deposit
Direct deposit information is part of the electronic record; therefore, a separate Form 3174
does not have to be completed for e-file. However, remember that the direct deposit
information for the federal and State returns can be different. This is especially important
when the taxpayer has a Refund Anticipation Loan (RAL).
Note: Treasury cannot make any changes to direct deposit information after the return is
transmitted.
Direct deposit requests associated with a foreign bank account are classified as
International ACH Transactions (IAT) and not allowed. If a direct deposit income tax
refund is forwarded or transferred to a financial institution in a foreign country, the direct
deposit will be returned to Treasury. If this occurs, the refund will be converted to a check
and mailed to the address on the tax return. Taxpayers should contact their financial
institution for questions regarding the status of their bank account.
Refund requests cannot be made by direct deposit for an amended state return. A refund
check will be mailed to the address on the Michigan return.
Direct deposit is not available for City of Detroit refunds. All City of Detroit tax refunds will
be issued as checks and mailed to the taxpayer.

2.22.2 Preparer Notes
Software may include a Preparer Notes area for the State return. The purpose of this field
is to capture additional descriptive information from lines that did not have sufficient
space. Michigan Preparer Notes can contain up to 150 characters. Tax preparers are
22

encouraged to utilize Preparer Notes and PDF attachments when supported by the
software.
Using Preparer Notes for both federal and State and/or City returns and including
recommended PDF attachments may reduce the need for Treasury to write to the
taxpayer for additional information.
Examples of information that can be included in Preparer Notes with recommended PDF
attachments:
•
•
•
•
•
•
•
•
•
•

“Combat Zone” if taxpayer is serving in a combat zone.
“Federal Extension granted to MM-DD-CCYY” if taxpayer has been granted an
extension to file his or her federal return.
Explanation of a large subtraction.
(Recommend including an Explanation.pdf when not supported by federal forms)
Explanation of a miscellaneous subtraction.
(Recommend including an Explanation.pdf)
How taxpayer met expenses when total household resources is very low.
(Recommend including an Explanation.pdf)
Co-owners share of property taxes.
(Recommend including the PropertyTaxStatement.pdf)
Explanation of taxpayers paying room and board/property tax credits.
(Recommend including the SpecialHousingStmt.pdf)
Farmland agreement number reduced for exception by percent.
(Recommend Assessor.pdf)
Identify where prior year farmland refund is included on federal return.
Withholding corrected on an amended MI-1040.
(Recommend including an Explanation.pdf to provide copies of the W-2(s))

2.23. Transmitting the Michigan Electronic Return
The ERO, tax preparer, and/or electronic transmitter must follow all electronic transmitting
procedures, communication requirements, and technical specifications required by the
IRS and Treasury to participate in the State and IRS MeF programs.

2.23.1 Acknowledgment of Electronic Returns
The Michigan acknowledgment informs transmitters that the Michigan return data has
been received. The Michigan acknowledgment is separate from the federal
acknowledgment.
If a federal return is rejected, the accompanying Michigan return will also be rejected. If
the error is one that can be corrected, both return records may be retransmitted to the
IRS. Do not assume that an acknowledgment from the IRS is a guarantee of receipt by
Michigan.
23

Under normal processing conditions, the Michigan acknowledgment file is available to a
transmitter within three business days of successful transmission to the IRS. Transmitters
who transmit for EROs and tax preparers must notify filers of the Michigan
acknowledgment at the time of receipt.
If filing a combined State and City return, both the State and City return must be accepted.
If an error occurs in either the State return or City return, both filings will be rejected.

2.23.2 Status Codes Received from Treasury
Treasury will perform certain checks on the State return during the acceptance process.
All returns, whether e-filed or paper-filed, are subject to Treasury audit, and can be
delayed regardless of the acknowledgment code given. Should an error occur on the
Michigan return during processing, Treasury will communicate directly with the filer
through the regular error resolution process. Treasury will discuss return situations with
the preparer if the appropriate authorization box has been completed on the return.
Acceptance Status:
Accepted. Electronic return was accepted and will be reviewed and processed.
All e-filed returns are subject to Michigan audit and can be delayed regardless of
the status code given.
Rejected. Electronic return was rejected. If the Michigan and/or City of Detroit
return was rejected, a Rule Number which describes the reason for the rejection
will be provided. If the Michigan and/or City of Detroit return is rejected, it can be
retransmitted as a State and/or City unlinked return. If the return was rejected the
preparer may correct the error and retransmit the return. There is no limit on how
many times a State and/or City unlinked return can be retransmitted.
The IIT e-file Business Rules (rejection codes and descriptions) are posted in a separate
document on Treasury’s public Web page for tax preparers.

2.24. Tax Refund and Payment Information
Treasury will accept e-file returns with a balance due at any time during the e-file
processing season. Taxpayers who e-file returns with tax due are responsible for
submitting payment of the balance due by the due date. If full payment of that tax due is
not submitted by the due date, the taxpayer will receive a bill with applicable penalty and
interest.
Refund requests cannot be made by direct deposit for an amended return. A refund check
will be mailed to the address on the Michigan return.

24

2.24.1 State Tax Due Returns
In the event tax is due on the return, the taxpayer must submit payment by the due date.
Payments can be made by:
•

Direct debit from a checking or savings account when the return is e-filed and
supported by the software. A direct debit is a tax payment electronically withdrawn
from the taxpayer’s bank account through the tax software used to electronically
file the individual income tax return. Submitting the electronic return with the direct
debit information provided, acts as the taxpayer’s authorization to withdrawal the
funds from their bank account. Requesting the direct payment is voluntary and only
applies to the electronic return that is being filed.
Important: When the State return has tax due and the City return has a refund,
the City refund cannot be reduced to cover the State tax due.
Warehousing the tax payment allows the taxpayer to designate the date the
payment will be withdrawn from their bank account. Treasury will accept a
warehoused payment date up to 90 calendar days, but not beyond the due date.
Direct debit requests after the due date cannot be warehoused and must contain
a direct debit date that is equal to the transmission date of the e-filed return.
Treasury will not withdraw a payment from the designated bank account prior to
the requested debit date. Allow three (3) to four (4) business days from the direct
debit date for the payment to be withdrawn from the account.
Penalty and interest will accrue on any tax due that has not been paid by the due
date of the return. The day the return was transmitted, if accepted by Michigan, is
the received date.

•

Michigan Individual Income Tax e-Payments system by direct debit (e-Check) from
a checking or savings account, or by using a credit or debit card. Michigan IIT filers
have the option of making payments electronically using Michigan’s Individual
Income Tax e-Payments system. Paying electronically is easy, fast, and secure.
The available payment types include IIT tax payments (tax due on the MI-1040),
quarterly estimated income tax payments, and individual income tax extension
payments. Payments can be made using direct debit (e-Check) from a checking or
savings account, or credit or debit card. There is no fee for e-Check payments.
Credit and debit payments will be charged a convenience fee (2.35 percent of the
total payment for credit cards and a flat fee of $3.95 for debit cards) which is paid
directly to the payment processing vendor. Visit www.michigan.gov.iit for more
information.

•

Mailing Form MI-1040-V with a check or money order after e-filing the MI-1040
return. The MI-1040-V should not be attached to a copy of the return. When the
payment is made electronically, there is no need to mail the MI-1040-V to Treasury.

25

2.24.2 City Tax Refunds
Direct deposit will not be available for City of Detroit refunds. All City of Detroit tax refunds
will be issued as warrants and mailed to the taxpayer.

2.24.3 City Tax Due Returns
In the event tax is due on the return, the taxpayer must submit payment by the due date.
Payments can be made by:
•

Direct debit from a checking or savings account when the return is e-filed and
supported by the software. A direct debit is a tax payment electronically withdrawn
from the taxpayer’s bank account through the tax software used to electronically
file the individual income tax return. Submitting the electronic return with the direct
debit information provided, acts as the taxpayer’s authorization to withdrawal the
funds from their bank account. Requesting the direct payment is voluntary and only
applies to the electronic return that is being filed.
Important: When the City return has tax due and the State return has a refund,
the State refund cannot be reduced to cover the City tax due.
Warehousing the tax payment allows the taxpayer to designate the date the
payment will be withdrawn from their bank account. Treasury will accept a
warehoused payment date up to 90 calendar days, but not beyond the due date.
Direct debit requests after the due date cannot be warehoused and must contain
a direct debit date that is equal to the transmission date of the e-filed return.
Treasury will not withdraw a payment from the designated bank account prior to
the requested debit date. Allow three (3) to four (4) business days from the direct
debit date for the payment to be withdrawn from the account.
Penalty and interest will accrue on any tax due that has not been paid by the due
date of the return. The day the return was transmitted, if accepted by Michigan, is
the received date.

•

Mailing Form City-V with a check or money order after e-filing the City of Detroit
return. The City-V should not be attached to a copy of the return and should not
be used for any other payment made to the State of Michigan (such as a Michigan
tax due on Form MI-1040). When the payment is made electronically, there is no
need to mail the City-V to Treasury.

Payments using Michigan’s Individual Income Tax e-Payments system is not
available for City of Detroit tax due returns.

2.25. Responsibilities of Electronic Filers, Transmitters, and ERO’s
E-filers, transmitters, and EROs must abide by the terms set forth in the Michigan and
IRS guidelines; and must maintain a high degree of integrity, compliance, and accuracy
to continue to participate in the Michigan 1040 MeF programs.

26

2.25.1 ERO or Tax Preparer
An ERO is the person or firm who constructs the return information for the filer for the
purpose of electronically filing a tax return. Treasury requires that participants first be
accepted into the IRS MeF program to participate in the State program.
Preparers have been entrusted with the task of filing a client’s tax return and must assume
responsibility of ensuring the return arrives at Treasury. In the event that the e-filed State
and/or City return fails to arrive or is rejected and cannot be retransmitted, tax preparers
must notify their clients to file a paper return.

2.25.2 Transmitter
A transmitter is the business or individual who electronically sends the file of return data
to Treasury. In most cases, the software developer will be the transmitter.

2.25.3 Program Compliance
All electronic filers must comply with the requirements and specifications set forth in IRS
Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax
Returns and Publication 4163, Modernized e-File (MeF) Guide for Software Developers
and Transmitters.
All authorized e-file providers must be diligent in recognizing and preventing fraud and
abuse in the e-file programs. Providers with problems involving fraud and abuse may be
suspended or expelled from participation in Michigan’s e-file programs, be assessed civil
and preparer penalties, or be subject to legal action. Refer to IRS Publication 4557
Safeguarding Taxpayer Data, A Guide for Your Business, and Publication 4600
Safeguarding Taxpayer Information.

2.25.4 Timeliness of Filing
Transmitters must ensure electronic returns are transmitted timely. The date the
electronic return is posted and acknowledged by Treasury constitutes the receipt date of
the return and payment when applicable. Any return not acknowledged by Treasury as
“accepted” is considered not filed.
Transmitters should confirm that Treasury has issued an acknowledgment of the
Michigan return before considering the State and/or City filing complete.

2.25.5 Changes on the Return
After an electronic return is acknowledged as accepted, it cannot be recalled, intercepted,
or changed in any manner. If either the ERO or filer wishes to change any entries on an
accepted e-filed return, an amended return must be filed.

27

SECTION 3.
3.1.

DIRECT DEPOSIT

Benefits of Direct Deposit

Michigan taxpayers can elect to have their Michigan income tax refunds directly deposited
into their checking or savings accounts. When e-filing, direct deposit is part of the
electronic record.
Direct Deposit is:
•
•
•
•

Convenient. The refund is deposited directly into the taxpayer’s account at the
financial institution of their choice.
Safe. Refunds made by direct deposit are never lost or stolen.
Reliable. Refunds are deposited electronically, even when taxpayers are on
vacation or traveling on business.
Confidential. On average, fewer people will see a taxpayer’s account information
with direct deposit than with paper checks.

Refund requests cannot be made by direct deposit for an amended state return. A refund
check will be mailed to the address on the Michigan return.
Direct deposit is not available for City of Detroit refunds. All City of Detroit tax refunds will
be issued as checks and mailed to the address on the City of Detroit return.

3.2.

General Information about Direct Deposit

Treasury will not honor direct deposit requests made by persons who owe individual or
business taxes or have another State or federal debt that would result in their refunds
being offset. This includes third-party debts such as child support, garnishments, or
levies.
Treasury is not responsible for the misapplication of a direct deposit that is caused by
error, negligence, or malfeasance on the part of the taxpayer, ERO, transmitter, software
developer, financial institution, or any of their agents.
Tax preparers should advise the taxpayer that once an electronic return has been
accepted for processing by the State, the direct deposit election cannot be rescinded. The
RTN of the financial institution or the bank account number cannot be changed.
The authorization for direct deposit is voluntary and must be renewed yearly.
An e-filer who functions as an ERO must:
•
•
•

Ensure the taxpayer is aware of the general information regarding a direct deposit.
Not charge a separate fee for direct deposit.
Accept a direct deposit election to the financial institution designated by the
taxpayer.

28

•

•

•

•

•

•

•

Ensure that a taxpayer electing direct deposit meets the eligibility requirements.
The taxpayer must provide proof of account from the financial institution the
taxpayer designates to receive the direct deposit. This information is best obtained
from official financial institution records, account cards, checks, or share drafts that
contain the taxpayer’s name and address. The account must be in the taxpayer’s
name.
Direct Deposit requests associated with a foreign bank account are classified as
IAT. If an income tax refund direct deposit is forwarded or transferred to a financial
institution in a foreign country, the direct deposit will be returned to Treasury. If this
occurs, the refund will be converted to a check and mailed to the address on the
tax return. Taxpayers should contact their financial institutions for questions
regarding the status of their bank account.

Verify the direct deposit information on Form MI-1040 or Form 3174 (if a paper
filing becomes necessary) is correct and is the information transmitted with the
electronic portion of the return.
Enter the number from left to right and leave unused boxes blank. Include hyphens
but omit spaces and special symbols. The Routing Transit Number (RTN) is
usually found between these symbols:|: and |:. The sample check above shows
where the RTN and account number may appear.
The RTN must be nine digits. If the first two digits are not “01” through “12” or “21”
through “32,” the direct deposit will be rejected and a refund check will be sent to
the address as filed on the return.
Michigan tax preparers may recognize a valid Michigan RTN because it generally
begins with “07” or “27,” which is the Federal Reserve District that Michigan is in.
“07” is for banks and “27” is for credit unions. Upper Peninsula banks may have
“09” or “29.”
Ensure the direct deposit of refund for Michigan is not deposited in an RAL account
for the federal refund.
29

If Form MI-1040CR-7 is filed, it is important that box 10 be checked if heating costs are
currently included in rent.
When checked, the taxpayer will receive a refund and may choose direct deposit instead
of receiving a paper check.
If box 10 is not checked, a State of Michigan energy draft will be issued. Energy drafts
must be redeemed at the taxpayer’s utility company; therefore, direct deposit is not
available.

3.3.

Limitations of Direct Deposit

If Treasury is unable to honor a request for direct deposit, a refund check will be mailed
to the taxpayer’s address on the return. Following are some reasons for not honoring a
direct deposit request:
•
•

•

•

The taxpayer’s account was closed after the direct deposit request was submitted.
The taxpayer asked to have the refund deposited into a foreign financial institution
or foreign branch of a U.S. financial institution. The State of Michigan can only
make direct deposits to accounts in U.S. financial institutions that are located in
the United States.
The taxpayer or spouse owes a debt to the State of Michigan or to a third party
that requires the State to retain all or part of the refund. Treasury must satisfy this
debt before issuing any remaining refund. Examples of third-party debts include
child support arrearages and debts covered by a garnishment served against the
refund or credit. If this situation occurs, the taxpayer will receive a letter stating the
refund amount and to which debt it was applied. Depending upon the amount of
the debt, there could be no remaining refund.
The financial institution returns the direct deposit because an incorrect RTN or
account number was entered on the electronic record.

Treasury limits the number of deposits that can be made into any one account. Therefore,
Michigan is not able to process returns when a refund is deposited into the Rush Visa
Card account referenced at www.rushcard.com/index.aspx. Participation in this program
would significantly delay clients’ refunds.
Any assistance in discouraging taxpayers from participating in the Rush Visa Card
program in Michigan would be appreciated. If the volume of accounts using this service
is too large, Treasury would have to look at the possibility of issuing paper refunds to any
returns with this account number list