How to Properly Complete Form 5121 for Detroit Taxes

Filing local taxes in Detroit requires specific forms, and Form 5121 is essential for residents and nonresidents earning income in the city. This form calculates tax liability based on residency status. Errors or missing information can lead to delays or unexpected tax bills.

Understanding how to complete each section accurately, provide required documentation, and submit it on time is key to avoiding issues.

Who Must Complete This Form

Form 5121 applies to individuals earning income in Detroit who must determine their tax liability based on residency. Detroit’s local income tax rates for 2024 are 2.4% for residents, 1.2% for nonresidents, and 2.0% for part-year residents, making correct classification essential.

Residents must file if they had taxable income, regardless of their employer’s location. This includes wages, salaries, self-employment earnings, and other compensation. Even if an employer withholds Detroit taxes, individuals must still file to verify the correct amount was paid.

Nonresidents must file if they earned income from work performed in Detroit, including those commuting from surrounding areas. Income earned outside the city is not subject to Detroit’s tax.

Part-year residents must allocate income based on time spent living in Detroit. Those who moved during the year must determine how much of their earnings were subject to the resident versus nonresident tax rate to avoid miscalculations.

Calculating the Required Fields

To report taxable income accurately, individuals must distinguish between earnings subject to Detroit’s tax and those that are exempt. Those working both inside and outside the city must allocate income appropriately, particularly nonresidents who worked remotely or traveled for work.

Deductions and exemptions reduce taxable income. Eligible adjustments include contributions to retirement plans or pre-tax deductions. The 2024 personal exemption is $600 per filer, though it may phase out at higher income levels.

Tax credits can lower the amount owed, especially for those whose employers withheld Detroit taxes. If withholdings exceed the tax liability, the excess may be refunded or applied to future taxes. Self-employed individuals must report estimated payments to avoid underpayment penalties.

Documentation Needed

Supporting records are necessary to verify income, deductions, and credits. The W-2 is essential for reporting wages and withholdings, and amounts must match the tax return.

Self-employed individuals or freelancers must report income using a 1099-NEC or 1099-MISC.

Deductions require documentation proving eligibility. Contributions to a Health Savings Account (HSA) or retirement plan need provider statements. Business expense deductions require receipts, invoices, or mileage logs. Taxpayers should retain records for at least four years in case of an audit.

Additional forms may be needed for tax credits or residency verification. Those claiming a credit for estimated payments should include payment confirmations. Part-year residents may need lease agreements or utility bills to confirm residency periods.

Submitting the Form

Form 5121 should be submitted to the City of Detroit’s Finance Department electronically or by mail. E-filing is recommended to reduce processing time and errors. Detroit partners with tax preparation software providers to streamline local filings. Paper filers must use the correct mailing address, as Detroit assigns specific P.O. boxes for different return types.

The deadline aligns with the federal tax deadline, typically April 15. If it falls on a weekend or holiday, it extends to the next business day. Late submissions incur penalties of 1% of unpaid tax per month, up to 25%, plus monthly compounding interest.

An extension can be requested, but it only delays the filing deadline—not the payment deadline. Any owed tax must still be paid by April 15 to avoid interest.

Amending or Correcting Errors

Errors on Form 5121 can result in incorrect tax calculations, delayed refunds, or penalties. If a mistake is found after submission, an amended return must be filed. Taxpayers should use the same form, marking it as amended so revised figures replace the original submission.

Supporting documentation is required for adjustments, particularly if they affect taxable income, deductions, or credits. If an employer issues a corrected W-2, the new form must be attached. Missing deductions should be supported with receipts or account statements.

Any additional tax owed must be paid promptly to avoid further interest, while overpayments may result in a refund or credit toward future liabilities.