Moved to Ohio from Michigan mid year - How to file State Income Taxes

[mcounteg]

I moved to Ohio in July from Michigan, however, still work remotely in Ohio for same Michigan company.  I received one W2 with all income taxed in Michigan, not Ohio.  When I file, do I split the income proportionately between the 2 states for the time I lived in each state or list all income in Michigan as the W2 shows?

[TeresaM]

When you file, in the My Info section, you will list your address as the Ohio address as of Dec, 31, 2022 and check that you lived in another state. This will prompt questions about when you moved. You will need to file Part Year Resident returns for both Ohio and Michigan and they will both ask you to allot the income between the states based on where the work was performed. So for the time you were physically in Ohio, you will owe state taxes there, even if the home office is in Michigan. 


 

[Hal_Al]

Split the income proportionately between the 2 states for the time you lived in each state.

You will probably have to use a work around to get TurboTax to prepare the two state returns.  At the w-2 screen split the boxes 15-20 W-2 info into 2 lines. On the 1st line leave MI in box 15 but change box 16 to what it should be; leave the Mi withholding in box 17. On the 2nd line put OH in box 15 and the OH portion  in box 16; leave box 17 blank..

You may want to consider mailing in a paper return, to MI, so you can attach an explanation  statement.

Ideally, you should try to get a corrected W-2 from your employer made out that way. 

[mcounteg]

Only the Michigan portion of Turbo Tax asked about the portion of these wages that is reportable to Michigan.  In the more information part it stated; "Part-year residents enter salaries and wages received for the period you were a Michigan resident plus any wages earned in Michigan after your residency changed."

[Hal_Al]

The Ohio portion, of the program,  uses the W-2 to allocate wages between states. 

"wages earned in Michigan after your residency changed" does not mean  wages from a MI employer; it means you physically worked in MI.

[mcounteg]

OK Hal_Al,  I understand what you're saying, however, when I only identify the wages in Michigan for the time I was physically there (about 53% of the year), my refund from Michigan jumps significantly and the Ohio tax bill is zero.  Ohio is showing a tax due for the time in Ohio, however, it gives me an equal tax credit, thus no taxes were ever paid or are required in Ohio.  It seems like I am only being taxed on 53% portion living in Michigan and they are refunding the taxes they charged for the entire year.  It's good news, but I don't want to get more back than I should.  Thanks again for your response. 

[Hal_Al]

Yes, that doesn't sound right.  Double check the W-2 screen. The other 47% of your wages should be in box 16 next to OH in box 15 (actually it sounds like you got that part right). . OH should not be giving you a credit for tax paid to MI (that income is not double taxed). Be sure you indicated you were a part year OH resident and are not filing as a resident. 

Ohio does a convoluted tax calculation for non-residents/part year residents. It calculates tax on total income, then it calculates a non resident/part year resident credit, which it subtracts from the tax it calculated on the total income. The credit is calculated as your non-Ohio income divided by Total adjusted Income multiplied by the total tax. TurboTax (TT)  does this by allocating your income as either Ohio or non-Ohio. While in the state section of TurboTax, go to "Forms" then "Form ITNRC p2 PY/NR Income Allocation". This should show you a breakdown of what Income TT is letting Ohio Tax you on. If this doesn't agree with what you think it should be, you'll have to recheck your input screens. In particular check the W-2 screens. Ohio should only tax the amounts that you show in box 16 when you show OH in box 15. Make sure that your non-Ohio wages show MI in box 15 of your w-2 screen, with the MI amount in box 16. For other (non- wage) income, TT will ask you, item by item, in the state section, how much is Ohio or non-Ohio income. Do not enter anything in the box titled “Ohio Compensation”. That box is only for full year residents of reciprocal (neighboring) states.

[mcounteg]

Thanks for everyone’s help.  I’m all set.