The state of Michigan has reciprocal agreements with the following states:
Illinois
Indiana
Kentucky
Minnesota
Ohio
Wisconsin
If the taxpayer is a resident of the state of Michigan and earned income from any of the states listed above, the taxpayer is only required to pay Michigan income taxes on any wages or salaries earned in that state(s).
If the taxpayer does qualify for the reciprocal agreement, the credit for taxes paid to another state cannot be claimed.
If the other state is Illinois:
- State Section
- Add or Edit Illinois Nonresident Return
- Part Year and Nonresident Questions - Complete this section indicating taxpayer was a resident of Michigan during the tax year.
The Illinois wages need to be removed from the return as well. To do so, from the main menu of the Federal Return select;
- Income
- W-2
- Edit the W-2(s) with Illinois wages and remove the amount listed in Box 16
Continue to save the changes. Disregard the warning about the withholdings. To claim exempt from Illinois withholdings on future returns, complete form IL-W-5-NR and file it with the taxpayers employer.
If the other state is Indiana:
- State Section
- Add or Edit Indiana Nonresident Return
- County Information - Complete the questions indicting taxpayer lived in Michigan and the county where you worked. Go to Indiana Reciprocal return (IT-40RNR) and answer the questions.
Please note that the taxpayer may still be subject to county tax on the income earned while a nonresident. According to Indiana Informational Bulletin #33, 'Indiana reciprocity agreements do not affect withholding requirements concerning the Indiana County Adjusted Gross Income Tax (CAGIT), County Economic Development Income Tax (CEDIT), or County Option Income Tax (COIT).' The program does not automatically calculate this amount.
To claim exempt from Indiana withholdings on future returns, complete form WH-47 and file it with the taxpayers employer.
If the other state is Kentucky:
- State Section
- Add or Edit Kentucky Nonresident Return
- Basic Information
- Residency Information - Complete the questions indicting the taxpayer is a resident of a reciprocal state.
- Form 740-NP-R - Nonresident Reciprocal State Return
To claim exempt from Kentucky withholdings in the future, file form 42A809 with the taxpayers employer.
If the other state is Minnesota:
- State Section
- Add or Edit Minnesota Nonresident Return
- Basic Information - Select your state of residency
- Return to main menu of Minnesota Nonresident Return
- Residents of Michigan and North Dakota - Enter Minnesota income as shown on M1 line 1 as a positive number (this number should match your federal adjusted gross income.) This can be found by going to Summary/Print > Adjusted Gross Income)
To claim exempt from Minnesota withholdings in the future, file form MWR with the taxpayers employer.
If the other state is Ohio:
- State Section
- Add or Edit Ohio Nonresident Return
- Subtractions from Income
- Employee Compensation earned in OH by residents of neighboring States -Enter the total income earned while a nonresident of Ohio as a positive number
- Return to main menu of Ohio Nonresident Return
- Form IT-NRS (Ohio Nonresident Statement). Select 'Yes' to complete the form. Complete the next section indicating your place of abode (this should be your resident state).
To claim exempt from future withholdings, complete form IT-4NR and file it with the taxpayers employer.
If the other state is Wisconsin:
-
State Section
Add or Edit Wisconsin Nonresident Return
Basic Information - Select Resident State (click 'Continue' at the bottom of the page to save) - Return to the main menu of the Wisconsin Nonresident Return
- Residency and Non-residency Questions - Complete this section as instructed.
The Wisconsin wages need to be removed from the return as well. To do so, from the main menu of the Federal Return select;
- Income
- W-2 - Edit the W-2 with Wisconsin wages and remove the amount in Box 16.
Click 'Continue' to save the information. Disregard the warning about the withholdings amount. To claim exempt from Wisconsin withholdings, complete form W-220 and file it with the taxpayers employer.
Note: The taxpayer may still be liable for county or city taxes in the state where the income was earned. Check with the state for more information.
Additional Information:
Michigan State Tax Information
Michigan Resident Return Instructions