MICHIGAN
separate property state

 

Military Income:  Exempt, but member must still file a return and subtract out the military pay on Michigan Schedule 1.

NOTE:  As a Michigan resident, service members are required to file a Michigan income tax return regardless of where their income is earned.  Michigan does not tax active duty pay, however, most interest, dividends, capital gains, and other income received are subject to Michigan tax.  Therefore, they must file a resident return and subtract military pay to determine taxable income.

Military Filing Requirement:  Yes, they must file a return to maintain their Michigan residency.

Military Spouse Residency Relief Act:  Michigan gives no guidance on the MSRRA other than for the Michigan resident. One pertinent portion of their guidance is, "a Michigan military spouse may not claim a credit for the income taxes paid to another state."

Forms Used:            

Filing Status:  If married couples file a joint federal return, they must file a joint state return.  If the spouse is a domicile (resident) of another state, the parties should file as nonresidents. 

Attach Copy of Federal Return:  Yes

Not Taxed: 

Other State Tax Credit:  Available.  Attach copy of other state return. 
Reciprocity States:  Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin.
Where to Mail:
Refund: Tax Due:
Michigan Department of Treasury
Lansing, MI  48956
Michigan Department of Treasury
Lansing, MI  48929
Forms Request: 1-800-367-6263 General Information:  1-800-487-7000
Electronic Filing:  (517) 636-4450 Website:  www.michigan.gov/taxes
Refund Inquiry:  1-800-827-4000  
E-filing Info:  Retain MI 8453 for a minimum of 3 years (6 years recommended).
Tax Form Instructions:
Resident Instructions Non-Resident Instructions

Filing Status Scenarios

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer)
2.  Taxpayer and Spouse Different States of Residence
3.  Taxpayer and Spouse Non-Residents
4.  Taxpayer Non-Resident - Spouse Part-Year Resident
5.  Taxpayer Married or Single - Resident but Income from Other State
6.  Amended Return

 

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer) - Taxpayer and spouse are both Michigan residents, lived at their present location all year, and one or both had income.

Main Info Screen.

 

W-2 Form.  Michigan does not tax military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Michigan 1040 Form.  A joint resident Michigan income tax return is prepared.  You must complete the School District Code as shown in the example. 

 

Michigan Schedule 1.  Review Page 2 to ensure that the military income is exempted on line 14.

Complete all other fields and forms with red or required information.

2.  Taxpayer and Spouse - Different States of Residence - Taxpayer or spouse is a resident of Michigan, while the other member is a resident of a different state.  A Michigan income tax return must be prepared due to the taxpayer or spouse having Michigan earned income.

Main Info Screen.  If the spouse is a domicile (resident) of another state, the parties should file as nonresidents.  For this example, the taxpayer is a resident of Michigan while the spouse is a resident of North Dakota.

 

W-2 Form.  Michigan does not tax military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Michigan 1040 Form.   A joint non-resident Michigan income tax return should be prepared.  You must complete the School District Code as shown in the example. 

Michigan Schedule NR - Part-year  and Nonresident Income Allocation will be generated.  This form is used to subtract out the other-states (North Dakota) income. Check the proper box to indicate which individual is the Michigan resident.

Michigan Schedule 1.  Review Page 2 to ensure that the military income is exempted on line 9, if it is not, enter on line 9, as in the example.

Review the remainder of the Michigan Form 1040, Schedule 1, and Schedule NR to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

3.  Taxpayer and Spouse Non-Residents - Taxpayer and spouse are residents of a different state.  The spouse and taxpayer must file a Michigan tax return due to one or both having Michigan earned income.

Main Info Screen.  If both members are residents of another state, the parties should file as nonresidents.  For this example, the taxpayer and spouse are both residents of Wisconsin but must file a Michigan income tax return because the spouse worked in Michigan.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Michigan Form 1040.   A joint non-resident Michigan income tax return should be prepared.    You must complete the School District Code as shown in the example.  

Michigan Schedule NR - Part-year  and Nonresident Income Allocation will be generated.  This form is used to subtract out the other-states (Wisconsin) income. 

Review the remainder of the Michigan Form 1040 and Schedule NR to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

4.  Taxpayer Non-Resident - Spouse Part-Year Resident - Taxpayer and spouse moved to or from Michigan during the tax year.  The taxpayer is a resident of a different state.  The Spouse is a part-year resident of Michigan.  The Spouse and taxpayer must file a Michigan tax return due to one or both of them having Michigan earned income and possibly income from another state.

Main Info Screen.  For this example, the taxpayer is in the military and a resident of Indiana.  The taxpayer and spouse moved from Michigan to North Dakota during the year.  The spouse was a resident of Michigan but is now changing their residency to North Dakota for tax purposes.  The spouse therefore was a part-year resident of both Michigan and North Dakota and must file a Michigan income tax return because the spouse worked in Michigan.

Part Year Resident States Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Michigan Form 104.   A joint part-year resident Michigan income tax return should be prepared.    You must complete the School District Code as shown in the example.  

Michigan Schedule NR - Part-year  and Nonresident Income Allocation will be generated.  This form is used to subtract out all the other-states (Indiana and North Dakota) income.  Enter the dates of residency as applicable.

Review the remainder of the Michigan Form 1040 and Schedule NR to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

5.  Married or Single Military Resident of Michigan with Income from Another State  - Taxpayer is single.  The taxpayer must file a Michigan tax return due to him or her having Michigan earned income.

Main Info Screen.  For this example the taxpayer is a military member stationed in North Dakota but a resident of Michigan.  The taxpayer had a job in North Dakota therefore having North Dakota earned income.

W-2 Form.  Michigan does not tax military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Michigan 1040 Form.  A resident Michigan income tax return is prepared.  Michigan taxes residents on income from all sources, even income earned while living in another state (North Dakota as in this example).    You must complete the School District Code as shown in the example.  

Michigan 1040 Form, Page 1, Nonrefundable Credits.  Line 18 must be prepared to give a credit for taxes paid to another state (North Dakota). You must complete the other states tax return first, then enter the amount of tax from the other states tax return.  This is not the amount the taxpayer had withheld from his or her pay but the amount of tax imposed on them.  Line 18 is the amount of income tax liability on the (North Dakota) tax return. Ensure you enter the amount in both columns. A copy of the other state's return must accompany the Michigan return.

Michigan Schedule 1.  Review Page 2 to ensure that the military income is exempted on line 9.

Complete all other fields and forms with red or required information.

6.  Amended Return  - An amended Michigan return must be filed because the taxpayer received new tax information after their Michigan return was filed.
Federal 101040XForm.  Before making any changes to the tax return add the US 1040Xform to the tax return.  You must check the box under Income and Deductions to lock in the entries in Column A - Original amount or as previously adjusted.

Michigan 1040X - Amended Income Tax Return.  Add the Michigan 1040X Form to the return.  Answer the questions as in the example.  You must check the box to lock in the entries in Column A - On original return, before making any changes to the return.

Make whatever changes are required to the federal tax return.  For this example, a new W-2 was received.

Michigan 1040X - Amended Income Tax Return, Page 1.  Return to the Michigan 1040X form, Page 1 to determine if the taxpayer is receiving an additional refund or owes money. 

Michigan 1040X - Amended Income Tax Return, Page 2.  On Page 2 you must enter an explanation for why the Amended Return is being prepared.  Enter the current date in the Date field.

Amended returns can not be e-filed.  The taxpayer must mail the federal 1040X and any state amended returns if required to be filed.