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Level 3

Remote job complications

Hello

I am working in Colorado. My family stays in Michigan. I visit my family every year for Thanksgiving and Christmas. But This year due to Covid, I was remotely working from Michigan for almost a month. My Car/Drivers license and Apartment lease was always in Colorado. Do i need to pay taxes in both the states. Are there any number of days I need to be in the other state to pay taxes ? 

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Level 15

Remote job complications

Most states have written rules to not tax people in this situation.  Michigan is not yet one of them. 

Reference: https://www.hodgsonruss.com/assets/htmldocuments/Telecommuting_5.22.20.pdf  

 

Q. Do I need to pay taxes in both the states?

A.  Yes, but "nobody" does. See http://money.cnn.com/2013/06/28/pf/taxes/business-traveler-tax-threat/  If you live in a state without an income tax (e.g. FL or TX), it’s more likely you should file in the work states. You can't use the "it all comes out even" rationale for not filing.

 

Michigan does not have a minimum days requirement.  The general rule, for state taxes, is: your report all your income on your home state return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state.  It usually comes out even.  You just have the hassle and expenses of preparing two returns.

You  have to file a non resident MI state return and pay MI tax on the income earned there.. You will also file a CO full year resident return and calculate tax on ALL your income. CO will give you a credit, or partial credit, for the tax you pay MI. So, there will be little or no double taxation. Do the nonresident state return first, in TurboTax.

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1 Reply
Level 15

Remote job complications

Most states have written rules to not tax people in this situation.  Michigan is not yet one of them. 

Reference: https://www.hodgsonruss.com/assets/htmldocuments/Telecommuting_5.22.20.pdf  

 

Q. Do I need to pay taxes in both the states?

A.  Yes, but "nobody" does. See http://money.cnn.com/2013/06/28/pf/taxes/business-traveler-tax-threat/  If you live in a state without an income tax (e.g. FL or TX), it’s more likely you should file in the work states. You can't use the "it all comes out even" rationale for not filing.

 

Michigan does not have a minimum days requirement.  The general rule, for state taxes, is: your report all your income on your home state return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state.  It usually comes out even.  You just have the hassle and expenses of preparing two returns.

You  have to file a non resident MI state return and pay MI tax on the income earned there.. You will also file a CO full year resident return and calculate tax on ALL your income. CO will give you a credit, or partial credit, for the tax you pay MI. So, there will be little or no double taxation. Do the nonresident state return first, in TurboTax.

View solution in original post

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