Even if i'm living in indiana and working in michigan, why am i paying taxes in michigan?

[KrisD]

Michigan and Indiana are reciprocal states.

If you live in Indiana and work in Michigan, your employer should be withholding Indiana tax, not Michigan.

You need to file form WH-47, "Indiana Form WH-47 Certificate of Residence" with your employer.

If you had Michigan tax withheld in 2016, you will need to file a non-resident Michigan tax return for a refund, and file a resident Indiana tax return to properly pay your state tax. 

In TurboTax, do your Federal return first, then the non-resident state (Michigan), then the resident state (Indiana).

If you work in an area that has a local tax, such as Grand Rapids, you are liable for paying the local tax. 

(edited 2-20-17)