Free Michigan 807 Template in PDF

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.

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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.

Withholding tax payments

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.

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.