I have completed all calculations and put them into Turbo Tax but a credit is showing up on my Michigan return for taxes paid to Indiana. The credit is for local IN taxes and off one of the W2s from the primary taxpayer. The primary taxpayer had 2 W2's: one for IN and one for MI but none of his income had to be divided. The spouse's income was 100% from IN, taxed all 12 months IN, but 50% earned while a resident of Michigan. I thought that no tax credit was allowed due to reciprocal state status, but are the local taxes eligible for the credit? Not sure why TT is including local county tax from IN and state taxes paid on primary taxpayers W2 from IN as a credit on the MI return. Please advise.
