My legal state residence is in Michigan, however I actually lived and worked the entire year in Indiana, so in the personal information question 2, do I still put Michigan resident with previous states lived in as Michigan?

It depends.

If you are a permanent resident of MI but were in IN on a temporary basis (even if it is for a year) but you intend to return to MI then put MI as your state of residence.

However, if you are making a permanent move to IN (and only have a driver's license from MI), then you will use IN as your permanent resident state (with MI being you previous state). (MI will be considered your previous state in this instance.)

Also IN has what is called a state reciprocal agreement related to wages with MI. This allows nonresidents to not have state withholding taxes taken out for wages earned in these states. Therefore, your IN-source wages will no be considered money earned in another state whether you use MI or IN as your permanent state of residence.

So if you are using either MI or IN as your permanent resident state, just make sure to selected "no" to " Did you make money in any other states?" under the Personal Information section in TurboTax (see screenshots)