Taxes withheld from Michigan non-resident

[wdh009]

Daughter, IL resident, had 2 part-time jobs as non-resident in MI while in college.  I understand the reciprocity agreement, however, she failed to submit proper W4.  She has fixed this for 2021.

She also worked in IL, so will file an IL return.

I am trying to do her taxes and am extremely confused about what must be done to properly recover what was withheld by MI employers.

Many, many answers re: this same topic indicate simply entering "0" as wages on MI return... end of story.  Seems there should be more to it than that, but this is a popular answer.

In reading all of the instructions on michigan.gov, it seems she must submit MI-1040, Schedule-1, Schedule-NR with income allocation columns A-C, and Schedule-W!!  Maybe I'm dense or something, but OMG, could they make this any more difficult to recoup a few lousy bucks?!  It almost seems easier to just pay the double tax amount on the IL return, but maybe that's by design...

Based on the above, I've tried to follow all the instructions, with numbers from all 3 W2s, doing all the calculations, yada yada, and it results in even less of a refund than what they've taken out from her 2 MI jobs.

After spending hours and hours on this, and the deadline looming, I was hoping someone on here might be able to provide some proper instructions on what exactly I need to do for the MI return, before I do the IL return in TT.

Thanks in advance for any assistance!

D

[ErnieS0]

Filing a nonresident Michigan income tax return and entering $0 for MI wages is the correct answer.

Generally it is also a good idea to file the MI return by mail along with a copy of your IL resident income tax return, all your W-2s and a note explaining that MI was withheld in error. You can e-file federal and IL.

You don't have to do this, but MI may send you a letter saying why did you report $0 wages when your W-2s say $xx.xx? Then you would have to write a letter and send a copy of your IL return and your W-2s. That may not happen.

If you do mail MI, we suggest sending it by certified mail with return receipt so you have proof of delivery.

If you entered $0 on the MI return, your MI refund should equal the entire MI tax withheld on both W-2s.

If you mean that total refund is less, that is probably correct. The IL tax rate (4.95%) is higher than MI (4.25%) so you are paying more tax to IL on the MI W-2s than was withheld.

[wdh009]

Thanks for your reply, ErnieSO.

When I mentioned the total refund being less, I mean the refund after entering all data on all 4 Michigan forms and doing the calculations, comes out lower than the total MI withheld amount.

In any case, if I follow your suggestion and just enter 0 wages on the MI-1040, do I also just enter 0 for all other items, even though instructions indicate that those other forms must be completed and included?

I assume that by minimally including a letter of explanation, and additionally including copies of the IL-1040 and W2s, they'll understand why none of the MI-1040 was completed, nor the other required forms?

If this is correct, then I'll be a happy camper and submit it per your suggestion.

[wdh009]

Can somebody provide confirmation on this answer?  I just read another response on this forum indicating all forms, 1040, Sched1, SchedNR, and SchedW will have to be completed...

Thanks.

[AmyC]

See MI-1040 Book – Instructions only (no forms) page 6 indicates that no MI tax should be paid. Enter a zero for wages. The IL address will give them the first clue about the reciprocal issue. Yes, you do need to fill in the forms required as page 6 indicates. The income is zero though.

Residents of reciprocal states do not pay taxes to MI.

[wdh009]

Thanks AmyC!