Multiple State filing

[imboyd4]

My daughter lives in Michigan but is a full time student in North Carolina. She works at the school she is attending. She didn't earn any income in the state of Michigan. Does she need to file a tax return in both states?

[MaryK4]

Yes, unfortunately, she would have to file a North Carolina Nonresident return then a Michigan Resident tax return.  She will get a credit for taxes paid to North Carolina.

[imboyd4]

Thanks. A follow up question:

She made under $2,300.00 for the year. Since this amount doesn't exceed her tax exemptions will she still need to file a state return in either state?

[KathrynG3]

It depends. I recommend filling out North Carolina, then Michigan if she had withholding.

First, presuming she had withholding in North Carolina, this will return her withholding.

Second, as a resident in Michigan, she is required to pay tax on all income. As a dependent claimed on your return, she must file in Michigan if her Adjusted Gross Income was more than $1,500. (see page 3 column 2, Who Must File a Return from the Michigan Instructions Book link below)

2019 MI-1040 Tax Book starting on page 10: your daughter still owes a state level tax on the income she earned. However, since North Carolina will refund the full amount, there is no offset. See page 14, column 1:

• "Michigan residents cannot subtract salaries and wages or other compensation earned outside Michigan. However, they may be entitled to a tax credit for income tax imposed by government units outside Michigan (see page 10)."