Because they say so. Michigan will give you credit for that on the state return, but you have to attach a copy of the IN return. So, even though the IN county does not require you to file a return, you have to file one to get the MI credit, even though there will be no tax due or refunded from the IN county. Verified by e-mail question to MI Dept. of Treasury 6-8-15.
Quite frankly it appears to me the MI authorities are hoping you won't go to the trouble (and cost), so they can keep your money. Notify your state legislator.
IN has a specific form (IT-40RNR) for a reciprocal state refund. Rather than paying TurboTax for IN software, you should try filing that form by hand. It looks pretty simple. Get it here: http://www.in.gov/dor/4733.htm
