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Level 1

Remote work for Tenneesee working from home in Michigan

Hello,

I work from home remote in Michigan, but work for a hospital in Tennessee. Who would I be paying my State withholding tax too? Also, I noticed they are not deducting city tax from my earnings, I dont want to get stuck with a huge city tax bill in the spring... how do I know if I have to pay my resident city income earned tax since I am technically earning my money for work I do in another state?

 

thanks!

1 Best answer

Accepted Solutions
Anonymous
Not applicable

Remote work for Tenneesee working from home in Michigan

great news for you

 

Tennessee is one of nine states in the United States that does not or nearly does not have income taxes. The state isn't entirely income tax-free, as Tennessee still has the Hall Tax, which is a flat tax on interest and dividends.  being a non-resident you wouldn't pay any tax there on your interest and dividends

 

the only state income tax return you'll have to file is for Michigan

 

as to Michigan cities

 

The Michigan cities that levy a local income tax charge tax rates ranging from 0.5 percent to 2.5 percent. Normally, city income tax will be withheld from your pay along with federal and state income taxes. 

 

Eighteen Michigan cities have a local income tax rate of 1 percent on residents. They are Albion, Battle Creek, Big Rapids, Flint, Grayling, Hamtramck, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Springfield and Walker.

Four Michigan cities have higher local tax rates. Detroit taxes residents at a 2.5 percent rate. Highland Park taxes residents at 2 percent. Saginaw imposes a 1.5 percent tax on residents. Grand Rapids levies a 1.3 percent tax on residents.

 

The state mitigates the cities’ tax bite by providing a partial state income tax credit for city income taxes paid.

 

ask your employer about city withholding if you live in one of the cities above.

 

if you are subject to one of those city's income tax, be aware TT may not do it. and even if they do you may have to paper file it.   

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6 Replies
Level 15

Remote work for Tenneesee working from home in Michigan

If the employer will not withhold the MI state and local taxes then you will need to make estimated tax payments ... talk to the employer first. 

Level 1

Remote work for Tenneesee working from home in Michigan

Hello. I'm about in the same boat. I'm living in MS but doing work in Texas and New Mexico. My employer doesn't pull out my local state "Mississippi" taxes, so I have to file estimated taxes. I had to go to my state's website, which searching in google or bing should lead you to the right direction. I had to make an account. To make sure I was doing the right thing, I actually called and spoke to someone in the tax department in my state, and they gave me instructions on how to make an account, when to file, and how much. My state is 5%. So I take any income made, and I calculate that on a calculator multiplied by 5%. So if just to say, I make $80,000 this year, I'll take 80,000 x 5% which is $4,000.00 state taxes. (I'm just using this number as an example.) So I'll take that $4,000.00 and pay it in estimated taxes. For Mississippi, our estimated tax payment days are: April 15, June 15, Sept 15 and Jan 15 for that prospective year in taxes. Though you'll be paying on Jan 15, you won't be paying for any income past the Dec 31, or year date on taxes. Anything you make payments on, I'd make a documented folder b/c in MS, we are required to have our own proof come tax time of what we paid. So save those receipts/print outs of when you make payments. I've also made an excel spreadsheet for myself that puts all my mileage income and paycheck income in the spreadsheet. I've instructed it to multiply that amount at that time by the required 5% for my state. It's basically a check for myself to make sure I don't get slammed with a huge tax bill at the end of the year. This is my first year doing it, so I'm really nervous about it. Good luck. 

Level 15

Remote work for Tenneesee working from home in Michigan

you would be paying Michigan; Tennessee does not have state income tax 

Level 15

Remote work for Tenneesee working from home in Michigan

You live and work in Michigan, so you pay MI state income tax, just like others who work for an employer based in another state.  As Critter suggested, if the employer will not withhold MI tax or your city tax, then make quarterly estimated payments to avoid a big tax bill at tax filing time.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Level 1

Remote work for Tenneesee working from home in Michigan

I would certainly back up this person's advice by speaking to your employer first. The person in charge of payroll should be able to advise you on if they are able to withhold your state and city tax for you before you go and make your estimated tax payments directly to your state.  

Anonymous
Not applicable

Remote work for Tenneesee working from home in Michigan

great news for you

 

Tennessee is one of nine states in the United States that does not or nearly does not have income taxes. The state isn't entirely income tax-free, as Tennessee still has the Hall Tax, which is a flat tax on interest and dividends.  being a non-resident you wouldn't pay any tax there on your interest and dividends

 

the only state income tax return you'll have to file is for Michigan

 

as to Michigan cities

 

The Michigan cities that levy a local income tax charge tax rates ranging from 0.5 percent to 2.5 percent. Normally, city income tax will be withheld from your pay along with federal and state income taxes. 

 

Eighteen Michigan cities have a local income tax rate of 1 percent on residents. They are Albion, Battle Creek, Big Rapids, Flint, Grayling, Hamtramck, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Springfield and Walker.

Four Michigan cities have higher local tax rates. Detroit taxes residents at a 2.5 percent rate. Highland Park taxes residents at 2 percent. Saginaw imposes a 1.5 percent tax on residents. Grand Rapids levies a 1.3 percent tax on residents.

 

The state mitigates the cities’ tax bite by providing a partial state income tax credit for city income taxes paid.

 

ask your employer about city withholding if you live in one of the cities above.

 

if you are subject to one of those city's income tax, be aware TT may not do it. and even if they do you may have to paper file it.   

View solution in original post

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