5338: City Underpayment of Estimated Income Tax (2025)
Michigan · Michigan Treasury · Used for tax years 2025
Michigan Form 5338 calculates penalty and interest for underpaid, late, or missed quarterly city estimated income tax payments for 2025. It figures underpayments for each payment period and totals the related penalty and interest.
Who files this form
Use Form 5338 to figure penalty and interest for missed, late or insufficient quarterly estimated city income tax payments for 2025. You may choose not to file this form. Treasury will calculate any applicable penalty and interest and bill you.
The instructions say not to file this form if:
- You had no tax liability for the preceding year, or you were not required to file for that year.
- Your total tax after withholding and credits is $100 or less.
- Your estimated payments were received in four equal, timely installments totaling at least 70% of the current-year or prior-year tax.
When it's due
For tax year 2025, the form lists these estimated payment due dates:
- First installment: April 15, 2025.
- Second installment: June 16, 2025.
- Third installment: September 15, 2025.
- Fourth installment: January 15, 2026.
Payments received after January 15, 2026, are not considered estimated tax payments for tax year 2025.
What you'll need
Have these returns and payment details ready:
- Your completed 2025 City of Detroit Income Tax Return, Form 5118, 5119 or 5120. The instructions require completing it before Form 5338.
- Your preceding-year tax amount and credits for taxes paid to another city.
- Your 2025 estimated payment amounts and payment dates.
- Your total withholding and taxes paid on your behalf by a partnership.
- Any 2024 overpayment credited forward to 2025.
- Your full name and Social Security number, plus your spouse’s information if filing a joint return.
Include a separate sheet if several calculations are needed because an underpayment was paid in multiple payments.
Common mistakes
- Including extension payments. The instructions say not to enter them on this form.
- Counting payments received after January 15, 2026, as 2025 estimated payments. The instructions say these do not qualify.
- Putting all withholding in one quarter. Enter one-fourth of total withholding and taxes paid by partnerships in each quarter.
- Forgetting a carryforward. Include any 2024 overpayment credited to 2025 in column A.
- Completing the calculation across all columns at once. The instructions say to complete lines 9 through 20 for column A before moving to column B, and so on. Complete each column only through the payment date.
- Assuming a refund means no penalty or interest. Charges may still apply when a quarterly payment was late or insufficient.
Questions people ask
Can Treasury calculate the charges instead?
Yes. If you prefer not to file Form 5338, Treasury will calculate any applicable penalty and interest and bill you. The instructions state that the charges will be the same whether payment is received with the return or Treasury sends a bill.
Does a later overpayment erase an earlier underpayment?
Not necessarily. Penalty and interest are figured separately for each due date and may still apply even if a later overpayment makes up an earlier shortage.
How are payments applied when I have an underpayment?
Payments are applied to an underpayment first, regardless of when the payment is received. Any remaining balance is applied to the next period.
How does the form calculate the penalty?
For each period, the form multiplies the underpayment by the number of months and then by 1%. Any fractional month counts as a whole month. The penalties for all four periods are then added together.