I live and work in Michigan, but my employer is from Indiana and on my W-2 I paid IN state taxes.

[Jacobrlang]

I'm wondering what should I do

[HelenaC · Accepted solution]

You will have to complete an Indiana Nonresident income tax return in addition to a Michigan Resident income tax return.  Michigan and Indiana are Reciprocal States. You should submit Form WH-47 to your employer so they stop taking Indiana income taxes and withhold Michigan income taxes. 

A reciprocal agreement, also called reciprocity, is an agreement between two states that allows residents of one state to request exemption from tax withholding in the other (reciprocal) state. This can save you the trouble of having to file multiple state returns.

To file your Nonresident Indiana income tax return, click on How do I file a nonresident state return? 

Additional information: Which states have reciprocal agreements?

[Jacobrlang]

Thank you this is very helpful.

[HelenaC]

You are very welcome. Thank you for using TurboTax. We really appreciate it.

[Lovesmith84]

I have the same issue but when I did the non-resident return, IN still kept money for the county taxes that was not refunded to me.  They said they were owed for working there, even though I remained in MI for the entire year.  It did not give me an option to leave the county worked in blank and a selection had to be made to continue with the form.  How do I ensure my county taxes will be refunded?

[Hal_Al]

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