"But the credit cannot be more than the MI tax calculates on the Toledo income," This is the part I don't understand. And the example shown in the booklet shows different amounts of income being earned in different states. In my case 100% of income is earned in Toledo OH (but I live in MI). So because of the reciprocal agreement I don't pay any (payroll) state tax to OH, I pay it to MI. But I pay (payroll) City of Toledo 2.25% tax from my wages and this amount is listed on the W-2.
In a nutshell, the Mi tax rate is 4.25%. So if line 17 equals $3650 and line 18 equals $2000, line 18a and 18b would also be $2000. $3650 - $2000 = $1650. So the MI tax owed would be $1650?
Thank you again for your replies and assistance.
