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:
- Sign in to TurboTax and continue your return
- Select State Taxes
- Select Continue on the Michigan line when you reach the Status of your state returns screen
- Select Continue on the We’ve Recommended a Residency Status screen
- 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
- Continue until you reach the A few things before we wrap up your state taxes screen
- 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
- Select I file as a Detroit Nonresident on the Your Detroit Return screen, then select Continue
- 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
- On the Detroit Wage Adjustment screen, enter the employer’s name, gross income, Detroit amount, and select Working Days Allocation as the Adjustment Type
- 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
