Claiming foreign tax credit in Michigan

Ve Vai · ‎February 18, 2021

I'm a resident alien living in Michigan and working remotely for a foreign company due to COVID.

I get paid in foreign currency to my foreign account. I have an SSN but do not have a bank account or work in US.

My spouse files a joint tax return and has already filed this years tax returns - not realising that foreign earned income should be reported.

So we are planning to file an amendment including the foreign earned income.

1. Can this be done right away or do we need to wait until next year to file an amendment for 2020?

2. I'm planning to claim a federal foreign income tax credit - showing the taxes already paid in the foreign country.

Do I have to do the same for state tax (Michigan)? If yes, can I file an amendment to report foreign income and claim foreign tax credit? - I see the foreign tax credit in Michigan is only limited to Canada.

Thanks!

DaveF1006 · ‎February 18, 2021

It depends. First of all, you can file your amendment this year to claim your foreign income. The amendment forms are not available though until mid-to late March so you will need to wait until then to prepare your amendment.

Secondly, your foreign income will be populated into your Michigan return once you enter it in as federal income. You are correct in stating that the only foreign tax credit you will receive in Michigan is from Canadian income only.

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Ve Vai · ‎February 18, 2021

Thank you for the response.

Relating to Michigan tax: https://www.michigan.gov/documents/RAB2002-05_96120_7.pdf

As per the above, "Under the Michigan Income Tax Act (ITA), an individual domiciled in this state is subject to a tax upon all taxable income from any source whatsoever, except that attributable to another state"

Would my foreign earned income be attributable to another state?

Ve Vai · ‎February 18, 2021

As in would a 'state' mean a 'foreign country' too?

DaveF1006 · ‎February 18, 2021

No. this is is just referring to any other state in the United States. Michigan.gov states that "Any portion of the foreign income included in adjusted gross income is subject to Michigan tax."

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Claiming foreign tax credit in Michigan

Deductions & credits

Deductions & credits

Deductions & credits

Deductions & credits