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CITY OF LANSING

WITHHOLDING TAX GUIDE

WITHHOLDING RATES Example: A construction firm from Ohio is An employee is anyone from whom an
doing work in Lansing. Even though it has employer withholds for either Federal or
Lansing has adopted the Michigan Uniform no Lansing business location, the firm is State income tax or social security tax.
City Income Tax Ordinance, effective July 1, required to withhold.
1968. This booklet contains instructions for PREDOMINANT PLACE OF
withholding under this ordinance. There are An employer who has locations both in and EMPLOYMENT
two withholding rates: one percent (1%); or out of the city must withhold from all those
half of one one percent (1/2%). employees working in the city, and from all Nonresidents of Lansing are subject
Lansing residents working outside the city. to withholding only if Lansing is their
Use the 1% rate for: predominant place of employment.
A non-profit organization in the city is
1) Lansing residents working in required to withhold from all of its employees The Ordinance defines predominant place
Lansing; (even though it is not engaging in business of employment as “that city imposing a tax
2) Lansing residents working outside activity in the usual sense). under a uniform city income tax ordinance
of the city who are not subject to other than the city of residence, in which
withholding for the city where they WHO MUST REGISTER the employee estimates he will earn the
work. New or established employers must greatest percentage of his compensation
Use the 1/2% rate for: register with the City of Lansing by filing the from the employer, which percentage is
L-SS-4 City of Lansing Income Tax Division 25% or more.”
1) Nonresidents of Lansing working in Employer’s Withholding Registration form. Therefore, Lansing is a nonresident’s
Lansing; The City of Lansing uses the Federal predominant place of employment if:
2) Lansing residents working outside Employer Identification Number (FEIN) as
the city who are also subject to the identifying account number. Complete 1) The taxpayer earns a greater
withholding for the place where they the form in its entirety and return as percentage of compensation in
work. instructed. Lansing than any other Michigan
city with an income tax, except the
The withholding rates are applied after The City of Lansing utilizes an online taxpayer’s city of residence.
allowing for the exemptions claimed by withholding site for monthly and quarterly
the employee, the employee’s spouse and withholding deposits and year-end reports. 2) This greatest percentage constitutes
dependent(s). Once the registration form is received by 25% or more of the taxpayer’s total
the Income Tax Office and processed, a compensation from the employer.
WHO HAS TO WITHHOLD Personal Identification Number (PIN) will be An employee can have only one
Every employer is required to withhold who: issued along with an instruction letter. predominant place of employment.
1) has a location in the city; If a new business has not yet received a Example No. 1: An employee resides in a
2) is doing business in the city even Federal Employer Identification Number, Michigan city that levies an income tax. The
though the employer has no location please contact the Income Tax Office. employee performs 60% of work duties in
the home city and 40% in Lansing. Lansing
within the city; is the employee’s predominant place of
WHO TO WITHHOLD FROM
employment because it is the taxing city,
3) has a location in the City due to a Employers are required to withhold from the other than the employee’s city of residence,
PA 425 Agreement. following employees: in which at least 25% of compensation is
An employer is any “individual, partnership, 1) All residents of the City of Lansing, earned.
association, limited liability company, whether or not they work inside the Example No. 2: An employee resides in a
corporation, non-profit organization, city; city that does not levy an income tax and
governmental body or unity or agency
including the state, or any other entity . . . 2) All nonresidents of the City of performs 60% of services in Lansing and
that employs 1 or more persons on a Lansing who have Lansing as their 40% in Detroit (both of which levy an income
salary, bonus, wage, commission or other predominant place of employment. tax). Lansing would be the employee’s
basis, whether or not the employer is in a predominant place of employment.
business.”

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The employer would be required to withhold Weekly ................................... $11.54 7) Income earned by an employee
at the other city’s appropriate rate. Bi-weekly.................................. 23.06 residing in a City of Lansing
Semi-weekly............................. 25.00 Renaissance Zone.
Example No. 3: An employee resides in Monthly .................................... 50.00
Lansing and performs 60% of services Per diem..................................... 1.65 While individuals with income as described
in city A and 40% in city B. All three are in items 1, 2, and 3 above are not subject
Michigan cities which have an income tax. After computing the tax, ignore all fractions to withholding on such income, such
The employer is required to withhold for less than 1/2¢ and raise all fractions of 1/2¢ individuals are nevertheless required
Lansing (the city of residence) and for city A and over to the next cent. to file an annual return and report such
(the predominant place of employment), but WHAT PAY TO WITHHOLD FROM income if they are Lansing residents, or
not for city B. are nonresidents earning such income in
The Ordinance requires that the City of Lansing.
LW-4 FORMS REQUIRED Lansing income tax be withheld from
To determine each employee’s place all compensation (salaries, wages, WITHHOLDING REQUIRED ON
of residence and predominant place of commissions, bonuses, etc.) for services RESIDENTS
employment you must have each employee rendered or work performed by Lansing The withholding rate for Lansing residents
fill out an Employee’s Withholding residents, regardless of whether such not subject to withholding in any other city
Certificate, Form LW-4. Only one Form services or work are in or out of the city, is one percent (1%). This is applied to the
LW-4 is required for each employee, even and from all compensation for services total compensation after allowance for the
though the employee may be subject to rendered or work performed in the city exemptions.
withholding for two or more cities. by nonresidents for whom Lansing is the
predominant place of employment. The withholding rate for Lansing residents
When properly filled out, the Form LW-4 will whose predominant place of employment is
give the employee’s city of residence and Vacation, holiday, sickness and bonus pay Detroit or any other Michigan city with an
the two cities or communities in which the to nonresidents who perform part but not income tax is half of one percent (1/2%). In
greatest percentage of compensation is all of their work or services in Lansing is addition to withholding half of one percent
earned. Most employees will only have one taxable in the same ratio as their normal for Lansing, you must withhold one half of
city of employment, and will circle 100% as activities. the other city’s resident rate.
the percentage of compensation earned in Example: A nonresident employee who is If a Lansing resident works for you in two
that city. subject to withholding on 60% of earnings, other cities that have an income tax, you
The Form LW-4 is also a statement of the because 60% of the work is performed must withhold:
number of exemptions claimed for the in Lansing, is also subject to withholding
employee, the employee’s spouse and on 60% of vacation, holiday, bonus and 1) half of one percent for Lansing, the
dependent(s). salary or wage payments during periods of city of residence;
sickness. 2) half of one percent for whichever
Employers withholding for Lansing may
obtain Form LW-4 from the City of Lansing/ PAYMENTS NOT SUBJECT TO of the two cities is the predominant
Income Tax Division, 1 stFloor-City Hall, 124 place of employment;
WITHHOLDING
W. Michigan Avenue, Lansing, Michigan 3) nothing for the third city.
Withholding does not apply to the following:
48933 or by visiting the City of Lansing’s
website at www.lansingmi.gov. 1) Fees paid to professionals, In no case are you required to withhold for
Do not mail LW-4 cards cards to the city; brokers, and any other independent more than two cities: the city of residence
these must be retained for the employer’s contractors who are not employees and the city of predominant employment.
use. of the payer; In the following examples, the employer is
2) Payment to a nonresident employee assumed to have a location, or to be doing
EXEMPTIONS for work or services performed business, in each of the cities mentioned.
Exemptions of $600 per year are allowed in Lansing, if the employee’s Example No. 1: A Lansing resident works at
for the employee, the employee’s spouse predominant place of employment is your out-of-town location, in a city that has
and each of the employee’s dependents. not Lansing. no income tax. The resident, who claims
Additional exemptions are allowed if either 3) Payment to a nonresident employee three exemptions, earns $500 per week.
the employee or the employee’s spouse is for work or services rendered Withholding would be $4.65 per week.
65 or over, blind, deaf, suffers some sort of outside the city (see Predominant 1) Allow $11.54 for each dependent.
major paralysis or is totally and permanently Place of Employment); Three times $11.54 is $34.62.
disabled.
4) Pensions and annuities, workmen’s 2) Subtracting $34.62 from $500 leaves
The employee must provide the employer compensation and similar benefits; $465.38 as subject to withholding.
with the number of exemptions by filling
out an Employees’ Withholding Certificate, 5) Amounts paid for sickness, personal 3) Multiplying $465.38 by 1% gives
Form LW-4. Employees should be instructed injuries or disability (so-called $4.65.
to claim their actual and true number of excludable sick-pay) to the same Example No. 2: A Lansing resident performs
exemptions. extent that these amounts are 30% of work services for you in City A, 60%
exempt from the Federal income in City B and 10% in Lansing. All three
If an employee fails or refuses to file a Form tax. The employer may withhold cities have an income tax. The resident’s
LW-4 with you, the ordinance requires the from such payments if Federal earnings are $500 dollars a week, and the
employer to withhold one percent from the income tax is withheld from them; resident has three exemptions.
employee’s total compensation without
benefit of exemptions. 6) Amounts paid to an employee Lansing’s withholding on this employee is
as reimbursement for expenses half of one percent on a salary of $500,
If making a direct percentage computation, incurred in performing services; after exemptions.
use the following amounts per exemption:

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1) Subtract $34.62 (three exemptions 2) Subtracting $34.62 from $500 leaves quarter or month in which it was
at $11.54 each) from $500, leaving $465.38 subject to withholding. made, the employer shall make
$465.38 as subject to withholding. 3) Multiplying $465.38 by 1/2% gives the necessary adjustment on a
2) Multiply this by 1/2% to get the Lansing withholding of $2.33. subsequent pay for that employee.
Only the corrected amount should
Lansing withholding of $2.33. Example No. 2: A nonresident employee be included in the quarterly or
City B’s withholding is computed on 60% lives in Detroit, performs 80% of work monthly return to the city;
of the resident’s salary and the resident is services in Lansing, earns $500 weekly, and
allowed full exemptions. claims three exemptions. The employee’s 2) If the error is discovered in a
1) Multiply $500 by 60% to get $300, withholding for Lansing is $1.83 and if you subsequent quarter or month
the amount of compensation earned do business in Detroit, you will be required of the same calendar year, the
in City B. to withhold for that city. employer shall make the necessary
adjustment on a subsequent pay
To determine Lansing withholding:
2) Subtract $34.62 in exemptions, and report it as an adjustment on
leaving $265.38 as the amount 1) Multiply $500 by 80%, which gives the next quarterly or monthly return;
subject to withholding. $400, as the amount earned in 3) If the error is discovered in the
Lansing.
3) Multiply $265.38 by 1/2% to get City following calendar year, the
B’s withholding of $1.33. 2) Subtract $34.62 (three exemptions) employer shall notify the Income Tax
from $400, which leaves $365.38 as Division of the error.
City A collects no withholding from this
the amount subject to withholding.
employee. If an error is discovered in the withholding
3) Multiply $365.38 by 1/2%. This gives of a former employee, notify the Income Tax
Example No. 3: A Lansing resident performs Division.
$1.83 as withholding for Lansing.
60% of work services for you in Lansing
and 40% in Detroit. Both have an income USE OF WITHHOLDING TABLES ANNUAL REPORTS
tax. The resident earns $500 per week and An annual report must be submitted
Withholding tables can simplify the process
has three exemptions. on Federal Form W-2 giving the name,
of computing the amount of tax to withhold by
To determine the Lansing withholding: eliminating many calculations required. The address, social security number, gross
1) Subtract $34.62 ($11.54 each Withholding Table Guide can be found at: earnings and Lansing tax withheld for
for three exemptions) from www.lansingmi.gov/employer_withholding. each employee from whom the tax has
been withheld. These must be submitted
$500, leaving $465.38 subject to REPORTING AND PAYING to this office, and a copy furnished to each
withholding. AMOUNTS WITHHELD employee by February 28th of each year.
2) Multiply $465.38 by 1/2% to get the An employer shall file a return furnished An annual reconciliation Form LW-3 must
Lansing withholding of $2.33. by or obtainable on request from the City, accompany the W-2 Forms when they are
To determine the Detroit withholding: and shall pay to the City the full amount of filed with the City.
1) Multiply the $500 salary by 40% to the tax withheld on or before the last day The City of Lansing requires W2’s in
determine the amount earned in of the month following the close of each electronic format if the employer has 10
Detroit, it is $200. calendar quarter. However, if during any or more employees. Accepted electronic
calendar month other than the last month filing formats are the Federal Filing Format
2) Subtract $34.62 in exemptions from of a calendar quarter the amount withheld (EFW2) and CityTax Proprietary Format
$200 to get $165.38, the amount exceeds one hundred dollars ($100.00), the (Excel .csv). Submit the W2s by CD-ROM,
subject to withholding. employer shall deposit the amount withheld USB Drive or email.
3) Multiply $165.38 by 1/2% to get the with the City Treasurer before the end of the
Detroit withholding of 83¢. next calendar month. Any employer who goes out of business
or permanently ceases to be an employer
Withholding payments shall be submitted:
WITHHOLDING REQUIRED ON must file W-2’s and LW-3 by the date
NONRESIDENTS 1) by sending a check or money order their final withholding payment is due and
to the City of Lansing Treasurer, submit form L-6-IT Notice of Change or
The withholding rate is half of one percent P.O. Box 19219, Lansing, Michigan Discontinuance.
on nonresidents of Lansing who have 48901; or All reports are to be mailed to the City
Lansing as their predominant place of
employment. 2) through the online withholding site at of Lansing/Income Tax Division, 1st
www.municonnect.com/lansing via Floor-City Hall, 124 W. Michigan Ave.,
If an employee lives in a city which also Lansing, MI 48933-1697 or emailed to
has an income tax you may be required a. ACH debit, or
withholding@lansingmi.gov.
to also withhold half of one percent for the b. Printing an L-941 voucher and
nonresident’s city of residence. mailing with a check or money ANY FURTHER QUESTIONS
order
Example No. 1: An employee resides in Phone: 517-483-4117
a non-taxing city and works full time for Forms are also available by contacting the Fax: 517-483-6084
you in Lansing, has earnings of $500 per Withholding Department at 517-483-4117. Mail: City of Lansing/Income Tax Division
week, and claims three exemptions. The 1 st Floor-City Hall
CORRECTION OF ERRORS
employee’s withholding is $2.33 per week. 124 W. Michigan Avenue
Corrections of over and under withholding Lansing, Michigan 48933
1) Multiplying $11.54 by three due to an employer’s error should be Email: withholding@lansingmi.gov
exemptions gives $34.62 total corrected as follows: Website: www.lansingmi.gov
exemption.
1) If the error is discovered on an
employee’s withholding in the same

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Revised 6/2014

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