My parents bought a house in 2022 but didn't move until 2023... do I still have to do a 2022 tax return in both states?

[klma]

My parents bought a house in November, 2022 in Michigan.  They are keeping their old house in Illinois for a while and didn't move in to the new house until January 2023.  Do I still need to do a Michigan return since they own property in the state? Thanks

[RBBrittain]

Did they earn income from that property, or any other source in Michigan (other than wages)? Michigan & Illinois have a reciprocal tax agreement for wages; wages earned in either IL or MI are taxed only by the state you reside in at the time. However, if you had MI tax withheld from your check you still must file a MI return. For more on MI's residency & taxation rules, see page 6 at https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/2022/2022-IIT-Forms/BOOK_MI-1040... .

Though each state tends to read its residency rules differently, based on the facts given I would say your parents were full-year residents of IL. (Don't sue me or Intuit if MI says otherwise.) If they had MI tax withheld or MI non-wage income (income from MI property or businesses, gambling winnings in MI, etc.), they should file as a non-resident with MI. Otherwise, they only need to file in IL.

[klma]

Thank you! No income earned in Michigan. No Michigan tax withheld. But property taxes were paid on the Michigan house.  

[HelenC12]

No, they don't have to file a Michigan Individual Income Tax Return because they did not earn, receive, or accrue any Michigan income.

Even though they paid Michigan property taxes in 2022, they don't qualify for the Homestead credit because their permanent residence was not in Michigan.