What forms do I need to file for an employee moving to Kalamazoo, MI?

Question

I work in the accounting dept for an LLC in Missouri. We have an employee moving to Michigan that will be working from home. What all do I need to fill out? I know she needs a MI-W4. Do I need to fill out Form 518 to register for MI taxes + Schedule A, B, & the Power of Attorney? What is the simplest way to make sure we file W/H and Unemployment correctly?

Answer 1

Yes you will need to register for business taxes in the State of Michigan.  Once you register, the state will send you all the forms and booklets you need.  You can also find them all online.

The state is getting pickier about getting these forms filled out.  Michigan is one of the highest rated states in the governments use of technology, and the Michigan Department of Treasurey is one of the best sites I have seen.  The upshot of that is that they are really good at using technology to track information - and are generating more and more letters requesting information if they don't have every single scrap of paper they need or want...

Treasury's Home Page

http://www.michigan.gov/treasury/0,1607,...

Unemployment Home Page

http://michigan.gov/uia

If you are just dealing with an employee, you will have to pay the withholding taxes and the unemployment taxes.  If you have sales in Michigan, you will also have to deal with sales tax.  And you should have your tax accountant check out the new Michigan Business Tax to see if your business will have nexus in Michigan which requires you to file that tax return.  It was just implemented 1/1/08 and I don't understand it all yet...

You will also have to file a new hire form - this is part of the national effort to increase child support compliance and lets the state and federal government know when an employee changes jobs, so the Friend of the Court can find the new employer and send the withholding orders.

http://www.newhire-usa.com/mi/docs/3281v...

Depending on how you process your payroll, your payroll software may already have the forms you need.  I know that QuickBooks Payroll has the withholding coupons and both unemployment forms.  AME and CFS have the unemployment forms, but do not have the withholding coupons.

The withholding taxes are paid monthly, quarterly or annually based on the amount withheld.  The tax rate is 4.35%.  Based on the amounts you put on the 518, the state will send you a coupon book with the coupons you need.  You can also go online and fill out the 160 coupon online.  Then you print it off and mail it with your check.  You will also have to file the Michigan Annual form 160.  This is due February 28 of the following year.  This form will come with the booklet the state sends you.  It is also on-line.

The unemployment taxes are filed quarterly, and you will have to fill out both a 1020 and a 1017 form every quarter.  You can file some of this information on line, but I have never done it.  When you register - making sure you provide the information about unemployment on Schedule A, then the state will send you the forms every quarter.  You can use those or print off forms from your payroll software.  You have to fill Schedule B out, but since you are not buying a Michigan business, it does not really apply to you.

You probably will start off at an unemployment rate of 2.7% and that is paid on the first $9,000 of wages that you pay per year - so if you have just one employee, that will be $243 per year.  Once you have met that amount, you still have to file the reports quarterly - your tax bill will be zero, then you start all over next year.

The power of attorney form may not be required - that is used only if you have a tax accountant who is not part of your company and you want the state to send the forms to that tax accountant, and you want the accountant to have the power to talk to the state without your presence.

Answer 2

You will need to get a state of Michigan EON, and withhold MI state income taxes.