Mich. Admin. Code R 206.15 — Credit for income tax withheld from compensation

Rule 15. (1) The income tax deducted a nd withheld from compensation under
chapter 7 of Act No. 281 of the Public Acts of 1967, as amended, is allowed as a credit
against the income tax of the person from whose wage s the tax was withheld. Credit
shall be given to the employee even though such tax has not been paid to the
department by the employer.
(a) Example 1. An employee received compensation of $15,000.00 from his
employer for the year. The employer withheld tax of $500.00 from the employee
and furnished him with a W-2 wage and tax statement showing $500.00 withheld.
The department shall give the employee credit for tax withheld of $500.00.
(b) Example 2. The employer paid his employees by check and withheld tax from
each payment of wages. Each check contained a stub which itemized all deductions.
One of the deductions was headed "Michigan Tax." The employees did not have W-2
wage and tax statements to attach to their individual income tax returns because the
employer did not give the employees the statements. The employees shall receive
credit against the tax established by their individual income tax returns for all tax they
can prove was withheld. A copy of each chec k stub shall be accepted as evidence of
the
tax withheld unless the departme nt can prove otherwise. If the employee cannot
support his claim for tax withheld by W-2 wage and tax statements or check stubs, he
shall file an employee complaint form with his income tax return.
(2) If a taxpayer files i ndividual income tax returns on any basis other than a
calendar year basis, the tax deducted and withheld during any calendar year is
allowed as a credit against the income tax on the person from whose wages the tax was
withheld for the taxable year which begins in such calendar year. If the person from
whose wages the tax was withheld has more than 1 taxable y ear beginning in that
calendar year, the credit shall be allowed against the tax for the last taxable year
beginning in such calendar year.
(a) Example 1. A man and his wife own a business and file their individual
income tax return, MI-1040, on a fiscal year basis ending June 30th. They made 4
estimated payments totaling $700.00 toward their tax liability for their year ending
June 30, 1976. The husband also worked for another business and the employer
withheld $325.00 tax from hi s compensation for calendar year 1975. The tax
liability of the husband and wife esta blished by the MI-1040 for fiscal year ending
June 30, 1976, was $1,100.00. The taxpayer should take credit for the $700.00
estimated payments made for the fiscal year ending June 30, 1976, plus the $325.00
tax the husband's employer withheld during ca lendar year 1975. They must pay
$75.00 with the MI-1040 when they file.
(b) Example 2. The situation in this example is the same as in example 1 except
the husband worked from January 15, 1976, to May 31, 1976, for the employer but did
not work for him during calendar year 1975. The husband and wife cannot claim the
$325.00 tax the employer withheld from the husband's compensation in 1976 on their
MI-1040 for fiscal year ending June 30, 1976, and must pay $400.00 at the time they

file their annual re turn, MI-1040. They must take cred it for the $325.00 tax withheld in
1976 on their MI-1040 for the year ending June 30, 1977.
(c) Example 3. After filing his 1976 tax re turn on a calendar year basis, a
taxpayer decides to change his filing to a fiscal year basis using the fiscal period of
July 1 to June 30. He must file a return for the pe riod of January 1, 1977, to June 30,
1977, and pay the tax. He shall not receive cr edit for the tax withheld during that
period. When filing his full year return for the fiscal period July 1, 1977, to June 30,
1978, he shall report his income for the last 6 mont hs of 1977 and the first 6 months
of 1978 and shall receive credit for the full amount of tax withheld during calendar
year 1977. The 1977 W-2 wage and tax statement
shall be attached to the return.

Figure for 206.15