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Do I qualify for a Detroit nonresident tax allocation? 

SOLVEDby TurboTax107Updated 3 weeks ago

If you worked from home as a Detroit city employee during the year, you could qualify for a city tax break. However, it’s important to note that this allowance only applies to wages earned by Detroit nonresidents who worked remotely for a Detroit-based company. 

Residents of Detroit will still be taxed on all income, even if they’re working from home and telecommuting for a company outside the city limits.

When it comes to filing taxes, if a nonresident Detroit employee has a W-2 that shows city-based income tax withheld for periods when working remotely, the city permits those employees to exclude time spent working as a nonresident.

How do I exclude nonresident time in TurboTax?

TurboTax provides an option that allows you to divide days spent working in Detroit from days working outside the city. 

Here’s how it’s done: 

  1. Sign in to TurboTax and continue your return
  2. Select State Taxes
  3. Select Continue on the Michigan line when you reach the Status of your state returns screen
  4. Select Continue on the We’ve Recommended a Residency Status screen
  5. Select I need a Detroit City return and I file as a Detroit Nonresident on the Which Cities Did You Live or Work In? screen, then select Continue
  6. Continue until you reach the A few things before we wrap up your state taxes screen 
  7. Select Start or Revisit next to Michigan City Tax Returns
    • You may not see A few things before we wrap up your state taxes. TurboTax may take you straight to Live or Work in Any of These Cities? Select Detroit, then Continue
  8. Select I file as a Detroit Nonresident on the Your Detroit Return screen, then select Continue
  9. Under Detroit Wages, select Edit
    • To get to the Detroit Wages screen, you must set up the return as a Detroit nonresident, with a W-2 from an employer based in Detroit. The W-2 should have entries for boxes 18-20. Box 18 and 19 can be any amount, and box 20 should be labeled as Detroit
  10. On the Detroit Wage Adjustment screen, enter the employer’s name, gross income, Detroit amount, and select Working Days Allocation as the Adjustment Type
  11. The next screens will allow you to calculate income taxable to Detroit based upon days worked in Detroit versus total days worked:
  • On Allocation of Detroit Wages, TurboTax defaults to 260 work days for the year (5 days x 52 weeks) for Total Days Paid. This is the total number of days worked inside and outside Detroit. You can't enter more than 260 days
  • If you worked fewer than 260 Total Days Paid everywhere, explain why in the area provided. For example, I worked 150 days (3 days per week for 50 weeks)
  • Enter Total Vacation, Holidays, Sick Days, and Other Days not Worked. For example, 119 days consisting of 104 weekend days (2 days x 52 weeks) + 10 vacation days + 5 sick days
  • Enter total days worked within Detroit city limits for the year. For example, 50 days

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