My question is how to get a Detroit tax refund on a severance package as a non-resident of the city of Detroit.
According to https://www.michigan.gov/taxes/0,4676,7-238-73294-522100--,00.html severance is not taxable.
Background: I was laid off and got a one-shot severance package. I worked 3/4 of the year and of that 25% of that in Detroit. I don't have questions on telecommuting, just severance.
I figured out the telecommuting for 5121 https://www.michigan.gov/documents/taxes/5121_712033_7.pdf
as it is based on your w2 income and the percentage of days worked in Detroit compared to days not worked.
Severance should not be Detroit City taxable, but I don't see any way to account for it, so I would be paying taxes on it if I don't file right. Right now form 5121 is averaging my average daily wage artificially higher because it is pulling my W2 total income. With the severance, it did not involve any days, unlike a vacation.
Thanks
Your severance would be taxable in the same proportion as the rest of your work.
Michigan says:
Vacation, holiday, sick, severance and bonus pay to nonresidents who perform part but not all of their work or services in the City of Detroit are taxable in the same ration as their normal activities.
Example: A nonresident employee who is subject to withholding on 60% of their earnings, because 60% of their work is performed in the City of Detroit, is also subject to withholding on 60% of their vacation, holiday, sick pay, severance pay, bonus pay or wage payments during periods of sickness.