Behind on Taxes in Michigan? How to Catch Up

Unfiled returns do not quietly expire. The clock that limits how long a year stays open never starts on a return that was never filed, and the penalty for not filing is far larger than the penalty for not paying. Michigan adds a twist: for a lot of people, one missed year is three missing returns, because the state and 24 of its cities each want their own. The good news is that catching up is almost always paperwork, not catastrophe, and the first step is free.

File first, pay second

Two separate penalties apply when a year goes unfiled and unpaid, and people routinely confuse them. One is for not filing the return. The other is for not paying the balance. The filing penalty is the big one, and it stops the moment the return is on file, even if you cannot pay a dollar of what it shows.

That is why the advice is nearly always the same: get the returns filed, then deal with the balance. Filing is free. Interest still accrues on whatever is owed either way, but you have removed the largest cost of waiting in a single step.

One thing an extension will not do is help. In Michigan, as with the federal return, an extension gives you more time to file. It never gives you more time to pay. If you are already past the due date, an extension is not the tool you are looking for.

How many years you actually need

For the IRS, usually six. Long-standing IRS policy asks for a limited number of recent years to be considered current for being considered current. It is policy rather than statute, so a revenue officer working a specific case can ask for more, but six is the working answer for most people catching up on their own.

Michigan has its own filing requirement for every year you were a resident or earned income here, and Treasury does not automatically adopt the federal lookback. A CPA who does this work will confirm which state years are open before you start.

Two things change the calculation:

• A refund year is worth filing sooner. Federal refunds expire a fixed number of years after the original due date. Past that, the return is still accepted but the money is gone. Michigan runs its own refund deadline, so do not assume the two match.
• Self-employment years affect Social Security. Unreported self-employment income is not credited to your earnings record, which quietly lowers benefits later. Filing fixes it, within limits.

Michigan is a second return, and for some people a third

The state return is the easy one, on paper. Michigan taxes individual income at a flat 4.25% for 2025 and 2026, with a single personal exemption, and the 2025 MI-1040 was due April 15, 2026, the same day as the federal return. Treasury does not forgive a year because the IRS side was handled. Whoever files your federal back years should be filing the matching Michigan returns in the same pass.

The city return is where Michigan gets unusual. Twenty-four cities levy their own income tax, and each one is a separate return with its own resident and nonresident rates. A Detroit resident who is behind on taxes is behind on three returns a year, not two. A Troy resident who works in Detroit owes the nonresident version. Detroit taxes residents at 2.4% and nonresidents at 1.2%, and it is the one city return the state processes. Flint moves to state administration starting with the 2026 tax year. The other 22 cities run their own forms and their own collections, and the city due date is generally April 30, not April 15.

The 24: Albion, Battle Creek, Benton Harbor, Big Rapids, Detroit, East Lansing, Flint, Grand Rapids, Grayling, Hamtramck, Highland Park, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Saginaw, Springfield, and Walker. If you lived or worked in any of them during a missing year, there is a city return in the pile too.

If the IRS already filed for you

When a year goes unfiled long enough, the IRS may prepare a substitute for return from the W-2s and 1099s it already holds. It is not a neutral reconstruction. It allows no itemized deductions, no credits, no dependents, and no business expenses against self-employment income, so the balance is almost always higher than a real return would produce.

A notice showing a balance far larger than you expected is often one of these rather than a mistake. You can still file your own return for that year to replace it, and for anyone with real deductions the corrected figure is frequently much lower. Treasury receives federal information too, so a federal substitute return can lead to a state bill built on the same inflated number. Filing the real returns fixes both.

The order of operations

1. Pull your IRS transcripts before guessing at anything. Wage and income transcripts show what was reported under your Social Security number, year by year, and they are free. They tell you which years are actually missing, which is often not the list in your head.
2. Pull your Michigan records. Treasury's online eServices lets you see your state account, and it is where state payments are made. If you had city withholding, your W-2 shows it.
3. Work out which years are required. A year below the filing threshold may not need a federal return at all, though filing can still be worth it to claim a refund or to start the clock that closes the year.
4. File oldest to newest so carryforwards land in the right order.
5. File the matching MI-1040 and any city returns for each year. Detroit's goes through the state; the other cities take theirs directly.
6. Then deal with the balance. IRS installment agreements and Treasury's payment arrangements both require the returns to be on file first, which is one more reason filing comes before paying.

What catching up costs

Back-year returns are priced per year, and each year is a separate filing. In Michigan, expect roughly what a current-year return costs for the same situation: about $220–$450 for a straightforward individual year and $500–$1,200 once self-employment is involved, multiplied by the number of years, with a city return usually added as a line item. Reconstruction work, when records are missing, is billed on top. Our Michigan CPA cost guide has the full table.

Six years of a simple return can therefore run well past a thousand dollars, and that is where people stall. Before you do, two things worth knowing. Anything with a business year, a city return, or a letter already in hand belongs with a local CPA, for the reasons in the next section. For the straightforward years, though:

• Many local firms decline back-year work during filing season, or price it at a premium, because it is labor-intensive and arrives at the busiest time of year.
• Remote filing services often handle prior years at their standard per-year price, agreed up front, which usually sits at the bottom of the local range. They match you with a licensed tax professional who prepares and files each year for a flat fee, typically a few hundred dollars for an individual return and more for self-employment. The preparer is licensed but not necessarily a CPA, and not necessarily in Michigan. If the blocker is cost and the missing years are plain W-2 returns, that is a real option.

When to hire a Michigan CPA instead

Cost is the wrong thing to optimize in several situations. Use a licensed local CPA if any of these apply:

• The IRS or Treasury has already made contact. A revenue officer, a lien, a levy, or a state collection notice means you want representation. A licensed Michigan CPA, license number starting 1101, can represent you before the IRS and deal with Treasury on your behalf, so you are never in that conversation alone.
• Business years are involved. Reconstructing books for an unfiled business year is judgment work, not data entry. And from tax year 2025, Michigan no longer follows the federal rules on bonus depreciation, business interest, and research costs, so a business owner's state return needs additions the federal software does not produce. A preparer who has not heard of the Michigan decoupling adjustment should not be filing your 2025 business year.
• City returns are in the pile. Twenty-two of the 24 cities run their own forms, and the resident and nonresident versions are different. Someone who files them every week is worth the fee.
• The balance is large enough to negotiate. Offers in compromise, penalty relief, and Treasury's own settlement options are their own discipline. A filing service prepares returns; it does not negotiate them.
• Records are genuinely gone. Rebuilding a year from partial evidence is where experience earns its fee.

Whoever you hire, check the license first. It takes a minute on LARA's lookup, and here is how to read what comes back. If you are weighing a CPA against an enrolled agent or a preparer for this, this comparison explains who can actually stand in for you.

Frequently asked questions