How do I avoid the penalty on Michigan MI-2210 due to no requirement for estimate tax payments?

Forum|Forum|1 year ago
March 9, 2025
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The General Instructions on the MI-2210 form state "No penalty is charged if estimates were not required in the immediately preceding year; however, interest may still be due." I was not required to pay Michigan estimated taxes in 2023 or 2024 and yet am still being assessed a penalty on my 2024 return because my tax due is over $500. I cannot find a way to mark this in TurboTax so that I can avoid the penalty. Any suggestions? Thanks.

LenaH

I created a mock return of your situation. I inputted less than $500 of tax liability in 2023 and over $500 in tax liability for 2024.

With that information inputted, my Line 27 shows zero due for total penalty and interest on Form MI-2210.

There are estimates tax vouchers being created because The Michigan Income Tax Act requires that a person must make quarterly estimated payments if the person's income tax liability, after credits and withholding, will be $500 or more for the year. Since it was over the limit for 2024, the vouchers were created. However, you are not being assessed penalty or interest.

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TomB-17Author

THANK YOU SO MUCH LenaH for your reply. Line 27 on my MI-2210 shows a $51 penalty ($48 penalty+$3 interest). Here are some other factors that may be the reason your mock return does not reflect this same result. I am military so my income is not taxed in Michigan. Therefore, I had $0 of Michigan taxes withheld from my 2023 and 2024 W2s. So when TT tries to calculate if I meet the 100% and 90% withholding thresholds, it gets a zero result. My only income taxable in MI is from interest, dividends and capital gains. Interest and dividends are negligible but I had roughly 10K of capital gains in 2023 and 19K in 2024. So my MI tax bill was $192 in 2023 (not enough to require estimated payments) and $599 in 2024 (enough to trigger the MI-2210 form). If you look at MI-2210 in the forms view, I am guessing your mock return shows box B checked in the "Form MI-2210 Information Smart Worksheet" section at the top. This would solve my problem. I could not find a way in the Step-by-Step instructions to make sure this box is checked. There are questions for box A and box C, but not box B. Am I allowed to check this box myself in the forms view and then submit my return? Thanks again.

TomB-17Author

Sorry - update. I now see under the "Enter Your 2023 Michigan Tax" Step-by-Step question where I can set my 2023 Michigan Tax = $0 if I did not have a tax liability in 2023. But that is not the correct answer to the question and it does not check box B on the form. I would think the correct TT question should be "Enter zero if you were not required to pay MI estimated taxes in 2023". Am I interpreting this correctly?