To
find out if you are eligible for any refund of the county tax you paid to
Elkhart County Indiana, file an Indiana State return. You would file the
Indiana return as a non-resident.
Since
Michigan and Indiana are "Reciprocal States", you are only required
to pay State Taxes to Michigan and not Indiana, however County taxes are not a
part of this arraignment and you are liable to pay Elkhart County tax for the
income you earn while working there.
Please
be aware that the tax you pay to Elkhart County is deductible on line 18 on
your Michigan State return.
Below
are the instructions from the MI-1040 (Michigan State Return) for deducting the
county tax you pay:
"Line
18: Income Tax Imposed by Government Units Outside Michigan. Include the amount
of income tax paid to:
• A
nonreciprocal state
•
A local government unit outside Michigan, including tax
paid
to local units located in reciprocal states
•
The District of Columbia
• A
Canadian province.
Include
only income tax paid to another government unit(s)
on
income earned while you were a Michigan resident and
taxed
by Michigan. For assistance with calculating this credit, go to www.michigan.gov/incometax.
Attach
a copy of the return filed with the other government unit(s) to your MI-1040.
If you do not attach the return filed with the other government unit(s) when
claiming this credit, processing of your return may be delayed or your credit
may be denied."
(On 1-16-17 I updated
my original posting to explain the steps to take using TurboTax)
TurboTax can calculate the proper tax when involved with
working in a reciprocal state and paying county tax in that state, but the
order you work in the TurboTax program is important.
Please do your taxes in the following order:
1.
FEDERAL
2.
WORKPLACE RECIPROCAL
NON-RESIDENT STATE (in your case, Indiana)
3.
RECIPROCAL RESIDENT STATE (in your case,
Michigan)
