MIDLAND, Mich – Moving between states is one of the basic freedoms we have as Americans but state individual tax rules can make it a little more challenging. Here is a brief summary of the steps you need to do to prove to Michigan that you’re no longer a resident for individual income tax purposes.

What You Need to Know
A person who used to live in Michigan needs to know how to officially end their residency with the Michigan Department of Treasury. You must understand the legalrules for changing your “domicile” (your main home), what to do with your taxes, and how to prove that you no longer live in Michigan.

The Rules
What is Domicile and How Do You Change It?
In Michigan, your “domicile” is your main, permanent home that you always plan to return to. To stop being a Michigan resident, you have to do three things at the same time:

1. Decide to leave your Michigan home for good.
2. Decide to make a new state your permanent home.
3. Actually move to and live in that new state.
   The Department of Treasury will look at many things to decide if your domicile has
   changed, such as:
   ● Where you keep your most important belongings.
   ● Where your family lives.
   ● Where you vote.
   ● Where you have memberships (like clubs or gyms).
   ● Where your car is registered.
   ● Where you do your banking.
   ● Where you run your business.
   No one single thing is the most important. The state looks at all of them together.

What to Do with Your Job’s Withholding
If your job takes out taxes from your paycheck, you must tell your employer that you no longer live in Michigan within 10 days of moving. This will make sure that they stop taking out Michigan taxes. This change will only affect future paychecks, not any that came before you told them.

Proving You No Longer Live in Michigan
The state of Michigan assumes you are still a resident unless you can show them proof that you are not. You have to give the Department of Treasury detailed information to prove you have moved. If you don’t pay taxes in the state where you now claim to live,
the state of Michigan might not believe you have moved.

File a final Michigan Form MI-1040
When you are a resident of Michigan, you are required to pay income tax on all income
you earn, regardless of where it was earned. A “part-year resident” is someone who
moved their permanent home into or out of Michigan during the tax year. For the time
you were a resident, you must pay Michigan income tax on the income you earned,
received, or accumulated while living there. Filing a final return ensures you have
properly reported and paid tax on that income.

The state presumes that a taxpayer is a Michigan resident unless they can prove
otherwise. Filing a part-year return is a formal way of notifying the state of your change
in residency status for tax purposes. This helps to prevent the Department of Treasury
from mistakenly believing you are still a resident and sending you notices about unpaid
taxes on income earned after you moved.

What This Means for You
To officially end your Michigan residency for tax reasons, you must:

1. Meet the legal rules for changing your domicile. This means you must show that
   you planned to leave Michigan, planned to live in a new state, and actually moved
   there. You should provide proof like voter registration, car registration, and
   banking information from your new state.
2. Tell your employer. If your job takes out taxes from your paychecks, you must tell
   them you are no longer a Michigan resident within 10 days of moving. This will
   change your future tax withholding.
3. Give the state proof. You must give the Department of Treasury detailed proof
   that you no longer live in Michigan. This includes showing that you have moved
4. your life to another state. If you are not paying taxes in your new state, it will be
5. harder to prove you have moved.
6. File a final tax return. Your final partial-year resident tax return is your final
   declaration showing that you have left the state and have appropriately resolved
   your Michigan residency status.
   
   By following these steps, you can make sure that the state of Michigan officially
   recognizes you as a nonresident for tax reasons.

This information is provided for information purposes only. Please consult with a licensed practitioner before acting on any advice you read in a web post or other media.

Imagine no more because those days are here and many small businesses are taking the opportunity to charge clients who chose to charge their purchase to their preferred piece of plastic.

Several credit card processing companies have been marketing the idea of “passing the credit card fee onto your customers,” and I’m here to say that this might be the worst idea of client engagement I have ever heard.

Here are five reasons why you should not charge your customers extra fees when they whip out their plastic at your establishment.

1. Profit and loss envy

I completely understand why a business owner might make this election. Like most good bookkeepers, we track a separate expense line on our client’s Profit and Loss for credit card convenience fees. This amount stands out like a sore thumb and many business owners begin salivating at the idea of this cash being funneled back to their pockets.

For context, I looked up the average fee for a small dining establishment. With gross sales of around $500,000, their total credit card fees were just under $16,000 for the year. What business owner wouldn’t love the opportunity to pocket an additional $16,000?* This could replace an aging machine, provide some pay increases, or maybe afford the owner a little well-deserved vacation! But is it as easy as just jacking the price up on the credit card machine? Let’s think about this a bit deeper.

*After-tax impact would net the owner $10,520 of Distributable Net Income (DNI).

2. Customers buy more with a card

Every business owner looks for ways to increase revenue and wasn’t this one of the reasons why you started accepting credit/debit card payments in the first place? According to Forbes.com, customers will spend 12 to 18% more per transaction when using plastic instead of cash. Think about it: Would you prefer to cut 15% off your bottom line just to avoid plastic? Probably not.

3. Cash isn’t as “free” as you think

Retailers who accept cash-only payments face several hidden costs that can directly impact their business’s bottom line, a few of these hidden costs (or risks) include

• employee theft
• external theft
• costs of surveillance systems to combat theft
• time spent counting
• reconciling and depositing cash
• balancing cash drawers
• bank fees (believe it or not, cash management is why branch banking has become so expensive)
• loss of sales from people (like me) who prefer using plastic over cash
• counterfeit loss
• proper record keeping
• accounting and change management

While cash transactions may seem straightforward overall, they come with a variety of hidden costs that can affect your bottom line and operational efficiency.

4. You already increased your prices when you started taking credit cards!

Like many business owners 20 years ago, I noticed that the fees of taking credit cards were eating into my bottom line. At that time I made one simple adjustment: I raised my prices by 5% and rounded up to the next whole dollar. I made this adjustment many years ago. By making that adjustment years ago and adjusting my prices for inflation, I have already accepted the fees as a part of my operational reality.

I will gladly pay (and deduct) the credit card processing fees because ultimately my clients are happy and I’m thrilled that my systems automatically reconcile these transactions with no effort on my part.

5. Customers (like me) will intentionally avoid you because you charge.

I live near Midland, Michigan and many Mom and Pop restaurants around here charge the added convenience fee when using a credit card. When I find myself in these situations, I prefer to reach for my emergency $100 to avoid paying the discretionary fee. I find it appalling that the restaurant owner will then ask me if I have any smaller bills.

I feel like I’m darned if I do and darned if I don’t, but I only go there when someone in the family insists on visiting this establishment. I refuse to go out of my way to patronize a business that looks for ways to penalize me as a paying customer.

As a matter of principle, I will go out of my way to intentionally thank business owners who choose not to charge a fee for using my card.

Discount instead of charge!

If you’ve read my rant and still prefer cash, here’s an idea: Instead of penalizing–I mean charging your customers who prefer to use a card–why not offer a discount to your customers who use cash (or write a check for that matter)?

This will encourage your customers to make decisions based on your operational preferences and not punish your customers for doing business with you.

My dad, like many fathers, played a crucial role in shaping my understanding of developing a successful career. Wrapped throughout these lessons was the importance of serving others and treating clients well. Dad taught me a variety of strategies to instill these values, hoping and praying that one day I would be prepared for the professional world.

Leading by Example

Dad taught me that actions speak louder than words. He modeled a strong work ethic, dedication, and integrity in his career. I saw his commitment to his work and passion for his profession. This real-life demonstration of hard work and perseverance was more impactful than any advice he could have shared by simply talking alone.

Encouraging Open Communication

Open and honest communication was key. Dad fostered an environment where my siblings and I felt comfortable discussing our interests, goals, and concerns as we learned and grew with clarity and confidence. These conversations covered a wide range of topics, from the practical aspects of different professions to the personal fulfillment they can bring. By listening actively and providing thoughtful feedback, Dad guided us toward making informed decisions.

Providing Exposure to Various Careers

Exposure to different careers was essential to understanding our options. My father arranged for me to spend time with other adults, engage in job shadowing, and have detailed conversations about career opportunities. This experience helped me grasp the day-to-day realities of various professions, giving me a clearer idea of what might suit my interests and skills.

Supportive Encouragement

Supporting children in pursuing their passions is another hallmark of a good father. Whether my interests aligned with my dad’s own career or ventured into an entirely new field, Dad provided encouragement and resources. This support made me feel confident and empowered to follow my dreams, knowing I had a strong backing.

Teaching Practical Skills

Practical skills such as problem-solving, critical thinking, and financial literacy are essential in any career. Dad taught these skills through everyday activities and repetitive learning opportunities. I didn’t always appreciate these lessons in the moment, but I seem to recall those lessons time and time again (and, of course, repeating them to my own sons).

Networking and Mentorship

Dad introduced me to mentors and taught me that professional networks can significantly impact my career development. He encouraged me to leverage my connections to provide guidance and opportunities. Networking events, informational interviews, and mentorship relationships can offer invaluable insights and open doors to future career paths.

Emphasizing Education and Lifelong Learning

Dad emphasized the importance of education and continuous learning. He encouraged me to excel academically and pursue further education when needed. Moreover, he instilled a mindset of lifelong learning, teaching that growth and development don’t stop after formal education but continue throughout one’s career.

Setting Realistic Expectations

Preparing children for the realities of the workforce is crucial. Dad set realistic expectations about the challenges and setbacks I would face. By being open about his experiences and obstacles, he helped me develop a resilient and problem-solving mindset, which is vital for long-term success.

Encouraging Independence

For better or worse, Dad allowed me to make my own decisions and learn from my mistakes. He provided guidance while avoiding micromanaging, letting me take ownership of my career choices and navigate life paths.

Demonstrating Client Service Excellence

Finally, teaching the importance of serving clients well is a critical lesson. Dad exemplified excellent client service through his actions, showing respect, empathy, and dedication to meeting others’ needs. He shared stories about his experiences that highlighted the significance of building strong, trustworthy relationships with others. By understanding the value of client satisfaction, I learned that success in any career is not just about my own individual achievements but also about contributing positively to others.

Closing Thoughts

I am blessed on so many levels. My dad has always been present in my life, which I know firsthand is not the case for everyone. I am so grateful for my dad and the sacrifices he made throughout his life for our family. I also know, both as a father myself and by watching him, that these sacrifices bless our own souls as well. I don’t believe anyone looks back on a job well done and regrets having pursued its completion.

Thank you, Dad, for being such a large part of the person I am today. I am truly blessed, and I’m glad that my sons have you in their lives as well. Happy Father’s Day!

It is essential that claims for Employee Retention Credits be made by business owners with complete understanding of the eligibility requirements as well as the consequences for improper, erroneous or fraudulent claims.

Taxpayers who question their claim may contact Frazier Law at (615) 267-0125 or (989) 704-6560 for an independent ERC review.

Key Features of the Withdrawal Process:

1. Employers who have submitted an ERC claim but have not received a refund can opt to withdraw to bypass future repayment, interest, and penalties.
2. The withdrawal process assists businesses that were misled into filing ineligible ERC claims by overzealous promoters. Claims retracted will be considered as unfiled, and no penalties or interest will be levied by the IRS.
3. It’s important to note that if someone deliberately filed a fraudulent claim or was part of such activities, the withdrawal won’t shield them from potential criminal consequences.

IRS Commissioner Danny Werfel emphasized the agency’s commitment to supporting small businesses that were influenced by aggressive ERC marketing schemes. Werfel encouraged employers with pending claims to consider this withdrawal option.

About the Employee Retention Credit (ERC):

The ERC, or Employee Retention Tax Credit, is a refundable tax credit for businesses that kept employees on their payroll during specific periods of the COVID-19 pandemic. It is aimed at companies affected by government-mandated operational suspensions or substantial revenue drops. The credit is not available for individual taxpayers.

Since its inception, approximately 3.6 million claims have been filed for the ERC. The IRS is intensifying its audit efforts on dubious claims and has numerous ongoing criminal investigations related to the credit.

Recent Developments:

A recent halt on processing new ERC claims was announced on September 14, mainly due to the surge of ineligible claims. This pause will extend until the end of the year. Claims made prior to this date will continue to be processed, albeit at a reduced speed owing to comprehensive compliance checks.

Guidelines on Withdrawing an ERC Claim:

To qualify for the withdrawal process, employers should meet the following criteria:

• Claims were made using specific adjusted employment returns.
• The adjusted return was solely for the ERC without any other modifications.
• They intend to retract the entire amount of the ERC claim.
• The IRS has either not paid the claim or, if paid, the refund check hasn’t been cashed or deposited by the employer.

Details on the withdrawal process can be found on the IRS website. The IRS also offers resources, including an upcoming webinar and an interactive eligibility checker for the ERC.

Beware of Scams:

The IRS has noted new tactics from scammers post the September 14 moratorium announcement. There have been cases of promoters persuading businesses into availing expensive upfront loans expecting a refund. The IRS urges taxpayers to be vigilant and be aware of the signs of ERC-related scams. The IRS continues to advocate for employers to consult trusted tax professionals and be cautious about promoters looking to exploit them.

The October 16th deadline applies to taxpayers who requested a six-month extension to file their 2022 tax return. The extension provides extra time to file but does not extend the time to pay any taxes owed. Those who haven’t settled their tax bill should do so immediately to minimize any additional interest and penalties.

Key Points to Remember:

• Ensure Accuracy: Double-check all information on the return to avoid potential errors or discrepancies.
• E-file for Speed: Electronic filing (e-filing) is the fastest, most efficient way to submit a tax return and receive a refund if one is due.
• Payment Options: If you owe taxes, consider direct pay options available through the IRS, or set up an installment agreement if you cannot pay in full.
• Refunds: For those expecting a refund, the IRS’s “Where’s My Refund?” tool provides updates within 24 hours of e-filing or four weeks after mailing a return.
• Seek Help if Needed: If you have questions or uncertainties, contact our office at (989) 704-6560 or (615) 267-0125 to schedule a consultation to discuss your tax situation.

Taxpayers who miss the October 16th extension deadline can face penalties, additional interest charges, and potential legal consequences. It’s crucial to act promptly and ensure compliance.

For more information, guidance, and resources on tax deadlines, visit the official IRS website at www.irs.gov.

About Rick Miller, CPA

Rick Miller is the Director of Tax & Business Services for Frazier and directs the Great Lakes office in Midland, Michigan. He leads the tax preparation team and works with the legal side of Frazier when handling tax controversy cases. He can be reached at rick@frazier.law or at (989) 704-6560.