Problem with non resident filing in Michigan for capital gains

[roytoutant]

Hi.  I am a KY resident and had an investment property in MI which was sold.    So I am working on my non-resident return for Michigan.

My problem is that turbotax is showing that I have a bunch of other capital gains reported as Michigan income, which are not MI income.

Digging into this problem, I see that the gains in question were reported on my federal form Schedule D, lines 1a and 8a.    I do not see a way to tell Turbotax that these gains are not Michigan income. 

This seems like a bug, does anyone know a work around?

Also I am doing a non-resident return for AZ but I don't seem to have the same problem there.

Thanks for any advice!

[NCperson]

@roytoutant - let's start with a review of Michigan Schedule NR - there are 3 columns - Total income, MI income and all other state income.  Is everything in the correct columns? (just trying to verify that it's really a problem)

Is Box 4a (nonresident) checked?  

[roytoutant]

Thank you for the response.   One form NR, box 4a is checked.

Also there are three columns as you mentioned.     

On line 6 of form NR, it is showing gains for Total Income, Michigan Income, and Other States income.   It is showing some gains as Michigan income which actually came from other states.   Those gains are the ones that were reported on federal form Schedule D, lines 1a and 8a.

Note that I had some other gains reported individually on Federal from 8949 which are being correctly reported as "Other States Income".  For those specific gains, turbotax allowed me to specify whether each gain was Michigan income, or not. 

So I am not sure how (if even possible) to specify the gains from schedule D as Other State Income.

[NCperson]

@roytoutant - what does the capital gains income  that are in the Michigan column represent? can you go back to those input forms and review everything?   is that the investment property gain? 

did you mean Line 8 (capital gains) of Schedule NR and not Line 6 (dividends and interest)? 

[roytoutant]

Sorry I meant to say that the capital gains were reported on schedule NR line 8, not line 6.

The gains being reported on the Michigan schedule NR are not the gains from the property sale in Michgain (I am actually still waiting on the K1 for that investment, but trying to get the rest of my return done).

The gains being erroneously reported as Michigan gains on schedule NR, are gains arising from stock sales at stock brokerages.  They were imported to turbotax from the brokers, and are shown on the federal schedule D, on line items 1a and 8a.     

For other gains reported on federal form 8949, turbotax is allowing me to specify which ones are Michigan gains.    And the turbotax is also allowing me to specify which K1 gains (from other investments) are Michigan gains.     So those gains are not a problem.

Thanks

[NCperson]

@roytoutant - sorry I can't help any much further - a few ireas

1) if you change those 'errant' sales so they are also reported on 8949 forms, then you will have the flexibility of adjusting them so they are not reporting in Michigan.  As long as it does NOT change the Federal tax return (and it shouldn't - just be careful it doesn't) , I frankly don't see the issue. 

2) contact customer support line and ask them what to do ...... it has to be a setting somewhere. 

[roytoutant]

Thanks for your responses.

I think I can probably just override the Income Allocation Smart Worksheet on line 5 which may solve the problem.    Although I hate to override anything for fear of unintended consequences.

But I will try customer support as suggested.

[NCperson]

@roytoutant - I would not override - at least two bad things occur

1) it invalidates the Turbo Tax Guarentee

2) and I "think" you can NOT efile - if you paper file the federal return, there is a 6-9 month backlog and you want to avoid that. 

[roytoutant]

For anyone who may be interested, I called the support line and they agreed that the override on the MI return was the best solution.  I can still Efile my federal return.

I was pretty well satisfied with using the support line for this purpose.