You do have another step. Since you live in Indiana, and Michigan and Indiana have a reciprocal agreement, none of your income is taxable in Michigan. On the Michigan non-resident return, you will encounter a screen that says Michigan Wages. There will be a box, and a number beside the box. You will type a zero in that box, because none of your income is taxable to Michigan state. Local taxes, however, are not covered by the reciprocal agreement. If you have Michigan local taxes withheld, and these are not refunded, there is a procedure to receive a credit on your Indiana return for these as well. Notice the following instructions:
-
Make sure on the W2 screen (on the Federal side of the return) that the local tax information in boxes 18-20 is associated with Michigan.
-
Make sure (on the Indiana return) you fill out the correct residency information, including your count of residency and Out of state, Michigan as your county of employment.
-
After several screens, you will come to a screen titled: Take a look at Indiana credits and taxes.
-
Under the subheading Personal, home, and family credits, click the Start box for Credit for Non-Indiana Local Taxes.
-
Click Yes on the next screen.
-
Fill in the appropriate information from your W-2 on the next screen entitled Credit for Non-Indiana Local Taxes.
You will then be credited for the amount you might have paid to the Michigan locality up to the amount you are taxed in your Indiana county on this same income.
Also note that you do not have to have Michigan taxes taken out of your income. They are not supposed to tax you. You may tell your employer that you wish to have him/her stop withholding Michigan state taxes because you live in Indiana. They can provide correspondence to the state to stop withholding to Michigan state.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
