Form 5469 - City Of Detroit Income Tax Withholding Guide - State Of Michigan

• Multiply number of exemptions by the appropriate

DW-4 Forms Required

exemption value (from the prior table).

To determine each employee’s place of residence and

• Subtract the result of Step 2 from the result of Step 1.

predominant place of employment an employer must have each

• Multiply the result from Step 3 by:

employee fill out an Employee Withholding Certificate (Form

○ 2.4% (0.024) for residents; or

DW-4). Only one Form DW-4 is required for each employee,

○ 1.2% (0.012) for nonresidents.

even though the employee may be subject to withholding for

two cities.

EXAMPLE: Gross pay is $200.00 per week and the wage

earner lives in Detroit and has 3 exemptions. The amount taxed

When properly filled out, Form DW-4 provides the

is $165.38 ($200.00 - $34.62). Apply the 2.4% resident rate

employee’s city of residence and the two cities or

($165.38 x 0.024), and withhold $3.97 from the employee for

communities in which the employee earns the greatest

the week.

percentage

compensation

from

the

employer.

Most employees will only have one city of employment and

The above method is applicable to all City of Detroit

will circle 100% as the percentage of compensation earned in

withholding for regular payrolls. For bonuses or other taxable

that city. Form DW-4 is also the employee’s statement of the

earnings paid in addition to regular payroll, do not adjust for

number of dependency exemptions claimed.

exemptions. Withhold the correct tax percentage from the

entire bonus or other taxable earnings amount.

If an employee fails or refuses to complete Form DW-4 upon

the request of the employer, tax shall be withheld from the

Resident – Employment in Other City Levying a

employee’s compensation at the resident tax rate without any

Tax

consideration of exemptions.

When a resident is employed at a job in a city other than the

Do not mail DW-4 forms to the city or the Michigan

City of Detroit and the other city levies an income tax, the

Department of Treasury; these are for the employer’s use and

employer must withhold separately for both the City of Detroit

must be retained in the employer’s files.

and the other city. The rate of income tax to be withheld for

Income Tax Rates

the City of Detroit depends on the tax rate of the other city.

Compute the City of Detroit withholding rate by subtracting the

The City of Detroit income tax rate for residents is 2.4%

other city’s nonresident tax rate from 2.4%.

(multiply by 0.024). The City of Detroit income tax rate for

nonresidents is 1.2% (multiply by 0.012).

Nonresident – Employment Partly in Detroit

Calculating the Amount to Withhold

If a nonresident of the City of Detroit works less than 100% of

the time within the City of Detroit for an employer, the amount

The City of Detroit Income Tax is a straight percentage on

withheld should be based only on wages earned in the City of

compensation after an adjustment for personal and dependency

Detroit. If gross pay is $200.00 and only 60% of the employee’s

exemptions. Each exemption is valued at $600.00 per year. For

work is in the City of Detroit, the gross pay for the City of

the various pay periods the exemption translates to the amounts

Detroit tax purposes is 60% of $200.00 or $120.00. In this

in the table below.

example, compute the amount to be withheld for the City of

Weekly ............................................................ $11.54

Detroit as if the employee earned $120.00 gross pay.

Bi-weekly ........................................................ $23.08

Nonresident – Predominant Place of

Semi-monthly ................................................. $25.00

Employment

Monthly ........................................................... $50.00

Per diem/daily ................................................. $ 1.64

Nonresidents of the City of Detroit are subject to withholding

only if the City of Detroit is their predominant place of

Exemptions are allowed for the employee, spouse, and other

employment. The predominant place of employment is that city

dependents allowed under federal rules. Additional exemptions

imposing a tax under a uniform city income tax ordinance other

are allowed if either the employee or spouse is 65 years of age

than the city of residence, in which the employee estimates he

or older, or blind (this is different from the federal rule).

will earn the greatest percentage of his compensation from the

Individuals who may be claimed as an exemption on the

employer, which percentage is 25% or more.

individual return of another taxpayer should report zero

The City of Detroit is a nonresident’s predominant place of

personal exemptions on the Form DW-4.

employment if:

The amounts in the preceding table are used to adjust gross

• The nonresident employee earns a greater percentage of

pay for payroll withholding. The adjustment is the number

compensation in the City of Detroit than any other Michigan

of exemptions on Form DW-4 multiplied by the exemption

city with an income tax, except the employee’s city of

value. On a weekly payroll for a wage earner with three (3)

residence; and

exemptions, the adjustment is 3 times $11.54, or $34.62.

• This greater percentage constitutes 25% or more of the

The following is a description of the most commonly used

nonresident employee’s total compensation from the employer.

method to compute income tax withholding:

• Multiply gross earnings by the percent earned in Detroit for

nonresidents or use gross earnings for residents.

Form 5469 - City Of Detroit Income Tax Withholding Guide - State Of Michigan - 2017 Page 2

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