My daughter is resident of Michigan. In 2019, she earned half of her income from Michigan (W-2 shows that). Other half income is from California (separate W-2). She is a consultant and worked there as a non-resident.
So her "FEDERAL AGI" shows up in Michigan 1040 as a total of both, Michigan and California, incomes. How/where can she subtract the California Income from her Michigan form? Can she show that as part of "Michigan Schedule 1 - Additions/Subtraction" form? On that form, page 2, there is line 13 "Income Attributable to another state. Explain type and source:"?
If not, there is another line 21 "Misc. subtractions (see instructions). Describe:......". Can it be listed there?
Would turbotax software automatically show up there? I have not used TURBOTAX lately, so don't know how it works.
If she is a MI resident, all her income is taxable to her home state. However, they do offer a credit.
MI-1040, Line 18: Credit for Income Tax Imposed by Government Units outside Michigan.
Line 18a: Enter the total income tax paid to other government units. If you paid tax to more than one unit, attach a schedule showing the tax paid to each government unit.
Include the amount of income tax paid to:
- A nonreciprocal state (Any state other than Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin)
- A local government unit outside Michigan, including tax paid to local units within reciprocal states (e.g., City of Toledo)
- The District of Columbia
- A Canadian province.
OK. So does she have to first file CALIFORNIA return, and then send a copy of it to MICHIGAN, to show her CALIFORNIA Income? (That way, MICHIGAN can verify how much she earned in CA vs. total AGI?)
When I did rough calculations using EXCEL per your suggestion, vs. entering all data in TURBOTAX, I am getting different "MICHIGAN" tax she owes. My calculations show that she owes $2,466 (after taking credit in 18B and MI tax already paid thru' W-2) but Turbotax shows $2,550.
TURBOTAX will not give me a "preview" of her MICHIGAN income tax return until we PAY....so no way to know what TURBOTAX's MICHIGAN 1040 form looks like. (Where the line 18A and 18B would have figures.)
Any other suggestions?
At this point you may wish to contact a specialist that can work through that section of the return with you. The specialists can look at your return on their screen to find out if Michigan's return is being calcualted coirrectly.
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