2. What is a composite return?

A Michigan Composite Individual Income Tax Return (Form 807) is a collective individual income tax filing for two or more of its nonresident members filed by the flow-through entity (FTE). This form is used to report and pay individual income tax under Part 1 of Public Act 281 of 1967, as amended. An intermediate FTE may elect to participate on behalf of its nonresident members, if its ultimate owner(s) can be identified**. Participation in a composite return will eliminate the need for an individual ultimate owner to file a Michigan Individual Income Tax Return (Form MI-1040), when the ultimate owner has no other Michigan-sourced income. 

A C corporation or an entity that files federally as a C corporation is not eligible to participate in a composite return.

This return is not an entity-level filing for tax imposed on the FTE.

** Limitations may apply on an intermediate flow-through entity' ability to participate in another flow through entity's composite return if the intermediate flow-through entity elected to pay Michigan Flow-Through Entity tax. See Flow-Through Entity (FTE) Tax Credit FAQs.