Unfortunately, Michigan has one of the highest penalties for underpayment of estimated tax. If you do not meet the exceptions, they will send you a bill for the penalty.
Taxpayers who failed to make required estimated payments, paid late, or underpaid in any quarter, may be charged penalty and interest. Penalty is 25 percent of the tax due (with a minimum of $25 per quarter) for failing to make estimated payments or 10 percent (with a minimum of $10 per quarter) for failing to make sufficient estimated payments or making estimated payments late.
The Michigan Department of Treasury follows the Internal Revenue Service (IRS) guidelines for estimated tax requirements. Based on the IRS estimated income tax requirements your total tax paid through credits and withholding must be:
- 90% of your current year's tax liability or
- 100% of your previous year's liability
- 110% of your previous year’s liability if your previous year’s adjusted gross income is more than $150,000 ($75,000 for married filing separate).
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