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You should see a option in the deductions and credits section of your Michigan return to apply for a credit for taxes paid to another state. You enter the taxes paid to Indiana, which is equal to the tax withheld there evidently, and it will be subtracted from your Michigan tax.
MI & IN are reciprocal states. MI will NOT give you a credit on the MI state return for IN tax withheld. Instead, you have to file an IN state return for a full refund.
IN has a specific form (IT-40RNR) for a reciprocal state refund. Rather than paying TurboTax for IN software, you should try filing that form by hand. It looks pretty simple. Get it here: http://www.in.gov/dor/4733.htm
Reciprocity applies only to state income tax, not local (city or county). If you had any IN county income tax withheld (box 19 of your W-2), you cannot get that refunded, but MI will give you a credit. For details see:
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