4571: Common Credits for Small Businesses (2024)
Michigan · Michigan Treasury · Used for tax years 2024
Michigan Form 4571 calculates the 2024 Michigan Business Tax Small Business Alternative Credit and Gross Receipts Filing Threshold Credit. The calculated credits are carried to the MBT Nonrefundable Credits Summary, Form 4568.
Who files this form
Use 2024 Michigan Form 4571 to calculate the Small Business Alternative Credit, the Gross Receipts Filing Threshold Credit, or both. Include the completed form with your tax return. The credits carry to the MBT Nonrefundable Credits Summary, Form 4568.
Taxpayers making a valid certificated credit election to file under the Michigan Business Tax (MBT) may claim these credits.
Small Business Alternative Credit: You are not eligible if any of these conditions apply:
- Gross receipts exceed $20,000,000.
- Adjusted business income after loss adjustment exceeds $1,843,400 for corporations or partnerships, including LLCs federally taxed as either, or $180,000 for individuals or fiduciaries.
- Any shareholder or officer has allocated income after loss adjustment over $180,000, or any partner has a distributive share of income after loss adjustment over $180,000.
- A C corporation shareholder’s or officer’s compensation and director fees exceed $180,000.
The credit is reduced when applicable allocated income or distributive share after loss adjustment is over $160,000 but not over $180,000. It is also reduced when gross receipts exceed $19,000,000 but are not more than $20,000,000.
Gross Receipts Filing Threshold Credit: Complete Part 2 if Michigan-apportioned gross receipts are at least $350,000 but less than $700,000. Special annualizing rules apply to tax years shorter than 12 months.
What you'll need
Have these forms and figures available, as applicable:
- Form 4567, MBT Annual Return: Your name, account number, business income, gross receipts, apportionment percentage, and federal net operating loss carryover or carryback.
- Form 4568, MBT Nonrefundable Credits Summary: Tax liability before these credits and the lines where you report the calculated credits.
- Form 4577 or Form 4578: Taxpayers claiming the Small Business Alternative Credit must complete and include the applicable schedule, except individuals and fiduciaries filing as individuals.
- Federal return and Schedule D: Capital losses used on the federal return.
- Worksheet 4746: If you are not subject to Business Income Tax, use its business income figure and attach the worksheet to the return.
- Form 4575: If applying a loss adjustment for the Small Business Alternative Credit.
Unitary business groups also use Form 4580. Each corporate member must file Form 4577, and each partnership member must file Form 4578, to claim the Small Business Alternative Credit.
How to file
Include completed Form 4571 as part of your tax return filing. The supplied text does not provide a mailing address or e-file directions.
- Enter your name and account number as shown on page 1 of Form 4567.
- Complete Part 1 if claiming the Small Business Alternative Credit. Otherwise, skip to Part 2.
- Carry the Small Business Alternative Credit from line 13 or line 19, as applicable, to Form 4568, line 7.
- Complete Part 2 if eligible for the Gross Receipts Filing Threshold Credit. Carry line 27 to Form 4568, line 8.
A unitary business group completes one Form 4571 for the group, using the designated member’s name and account number.
Common mistakes
- Leaving out required schedules: Small Business Alternative Credit claimants must include Form 4577 or 4578, as applicable, unless they are individuals or fiduciaries filing as individuals.
- Using the net Schedule D figure on line 3: The instructions require the capital losses used to reach the federal net figure, not the net figure itself.
- Omitting compensation paid through a professional employer organization: Include compensation of the operating company’s officers and compensated shareholders when determining Small Business Alternative Credit eligibility.
- Missing annualization for part-year shareholders or officers: The instructions require shareholder compensation amounts to be annualized when determining disqualifiers if stock was owned, or an officer served, for less than the full tax year.
- Reporting inconsistent totals: Form 4571, line 28, must equal Form 4568, line 9.
Questions people ask
What if my tax year is shorter than 12 months?
Annualize gross receipts, adjusted business income, and applicable partner, shareholder, and officer income to determine eligibility. Multiply the applicable amount by 12 and divide by the number of months the business operated. A tax year shorter than one month counts as one month for this calculation.
Can a prior loss help me qualify for the Small Business Alternative Credit?
Possibly. If adjusted business income was below zero in any of the five immediately preceding years and you received an MBT Small Business Alternative Credit for that same year, Form 4575 may allow a loss adjustment. It does not prevent a credit reduction based on gross receipts over $19,000,000 or change a C corporation’s compensation amount in Form 4577, column L.
How is an LLC treated?
An LLC follows its federal tax classification for MBT purposes. An LLC federally taxed as a partnership, C corporation, or S corporation must file under that same entity type for MBT.
Which income amount controls the Small Business Alternative Credit reduction?
The reduction uses the largest applicable allocated income or distributive share after loss adjustment. Enter that amount on line 11 even if it is $160,000 or less. If all applicable amounts are $160,000 or less, enter 100% on line 12.