How do I receive a refund for the Toledo, Ohio city taxes I paid as a non-resident in my Michigan refund?

[spartan05ashlee]

Do I have to file taxes with the city of Toledo and would I add the taxes taken out to my state tax credit in Turbo tax?

[Hal_Al · Accepted solution]

Michigan will give you credit for that on the state return, but you have to attach a copy of the city return. So, even though the Ohio city (Toledo) 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 Ohio city.  

So, yes.  You have to file taxes with the city of Toledo, if you want to claim the credit on your MI return. Otherwise, you do not need to file a Toledo return.

Yes, you would  add the taxes taken out, by Toledo, as a MI state tax credit,  in Turbo tax

[simplemom3]

Please let me know if I understand correctly.  Example:  Michigan resident working in Toledo pays $2000 on W-4 to the City of Toledo.  Amount of MI taxes owed is $3600.   I write $2000 in Box 18a and subtract that from Line 17  ($3600 - $2000 = $1600)  So the amount of taxes I owe Michigan is $1600?  And I write that in Box 20?   

Thank you so very much for helping me wrap my head around this.  Using actual numbers to plug in the equation somehow helps my poor, over-wrought brain to understand.  Your time and expertise are much appreciated. 

[Hal_Al]

@simplemom3 

Yes, that is basically correct.  

But the credit cannot be more than the tax MI calculates on the Toledo income.  TurboTax calculates the credit for you and puts the amount on line 18b*.  Line 18b is usually the same as line 18a, when an OH city tax is involved. 

But, technically, it's line 17 minus line 18b (not 18a) that gets written in box 20 (assuming line 19b is blank).

* If you're doing the form manually, see the form MI-1040 instructions for line 19b (page 11). 

 https://www.michigan.gov/documents/taxes/BOOK_MI_1040_674612_7.pdf

[simplemom3]

"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.  

[Hal_Al]

Q. So the MI tax owed would be $1650?  

A. Yes.  In your case (and most of the time) lines18a and 18b are the same. 

[elynnh97]

What specific place in Turbo Tax do I add this credit for the Toledo city taxes into my Michigan tax return?  

[Hal_Al]

@elynnh97  - I'm not familiar with the MI software (I'm in Ohio).  But that sort of thing usually comes up on a summary screen, so you may have to look for it. 

@AmyC  - are you familiar with the MI entry point?

[DianeW777]

Michigan will give you credit for that on the state return, but you have to attach a copy of the city return. So, even though the Ohio city (Toledo) 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 Ohio city.  The credit cannot be more than the MI tax calculates on the Toledo income.  

• In TurboTax Online use the instructions below:
  • Once you have completed all other information for the MI state return, select Other credits > Other State Tax Credit 
    • You can click the "Learn more" button  to select "Do Taxes Paid to Localities in Reciprocal States qualify?" for additional information 
    • Continue through this process and the credit will appear on line 18 of the MI-1040 for 2020

.

[elynnh97]

Not to keep asking the same question, but how do I provide proof I submitted a city return? It’s just a paper I fill out myself. So do I actually give a copy to

city of Toledo AND MI or do I fill out the city form and it doesn’t matter if I submit to Toledo as well?

[Hal_Al]

It's actually a good question and I don't know if MI bothers to verify it.  I suspect the official answer is you need to actually file it.  You do not need to provide proof that you actually file it, just give MI a copy.  If they want proof, they'll ask.

But I further suspect that as long the Toledo tax on the city return matches box 19 of your W-2, you really don't need to file it.  

[simplemom3]

If this has already been answered somewhere I apologize, but will I be able to e-file MI taxes by scanning and attaching W2/Toledo Tax Form, or does it have to be sent via paper mail?  

Thank you.

[Hal_Al]

No, you cannot e-file with a city return attachment.

[simplemom3]

Hal-Al, I followed your directions and am ready to attach the City of Toledo form to my MI form.  The Toledo city form states, "attach a copy of your W2s, schedules C,E,F and any 1099s along with a copy of your federal form 1040 to include schedule 1.  Your return is not considered filed until these documents are received."  Does this mean I have to attach our W2, federal return, and all of our federal 1099s to the City of Toledo form AND include all of it for MI?  (Because the MI form states not to include any W2s because it will delay the return.  ????)

Thank you for all your patience.  You've been a tremendous resource!  

[Hal_Al]

No. Just attach the Toledo City form.