Do I need to file in both states if they are reciprocal? Indiana ( work) and MICH( where I live). Turbo always prompts you MAY need to file in IN.

[ekucz]

Last year I did file in IN too.  My W2 says 
 i work in IN but am a resident of MI.
Felt like I paid turbo even tho I didn't owe b/c I paid Michigan.

[DavidD66]

Michigan and Indiana do have a reciprocal agreement for state tax.  As Michigan resident that works in a reciprocal state, you can fill out Indiana's exemption form - WH-47 and give it to your employer if you don't want them to withhold Indiana taxes.  If you haven't done that, you will have to file a Michigan state tax return and an Indiana non-resident tax return, if you want a refund of the Indiana tax withheld.  If you had not Indiana tax withheld, you don't need to file an Indiana tax return.

[Hal_Al]

In the personal info section, when it asks if you made money in another state, answer NO, per the reciprocal state instructions, on that page. This will prevent TurboTax from thinking you need to file an IN return.

TT may be flagging that you might need an IN return, for no other reason than that  you did one last year. Ignore the prompt. 

As others have said, you do not file a work state return, in the case of reciprocal states, unless IN state tax was mistakenly withheld.  In IN county tax was withheld (box 19 of your W-2), you cannot get that refunded (it's not a mistake).  Local taxes are not part of the reciprocal agreement.  

More on MI residents and IN county tax:

 https://ttlc.intuit.com/questions/3418266-i-live-in-michigan-and-work-in-indiana-i-m-being-charged-e...

https://ttlc.intuit.com/community/state-taxes/discussion/i-live-in-michigan-work-in-indiana-i-het-mi...

[ekucz]

Thanks for the info. Last year Turbo had me file a IT-40RNR form as my Indiana state.  I think what you said makes sense. Turbo seems to prompt me even though state is paid with the Michigan tax. And yes, I do pay Local tax in Indiana. So that's not refundable since I don't pay Michigan local as I understand your answer. I think I'll just go back and click NO as you suggested. At least this avoids paying 2 state to file.

Appreciate the help.

ekucz 

[TomD8]

@ekucz--

TurboTax prompts Michigan residents that they MAY need to file an Indiana return because the reciprocity agreement applies ONLY to W2 income (wages and salaries).  It does not apply to any other kind of income.