The state of Michigan has reciprocal agreements with the following states:
- Illinois
- Indiana
- Kentucky
- Minnesota
- Ohio
- Wisconsin
If you are a resident of the state of Michigan and earn income from any of the states listed above, you are only required to pay Michigan income taxes on any wages or salaries earned in that state(s).
NOTE: The credit for taxes paid to another state is automatically calculated in your account when you add a Nonresident return to your already created Resident Michigan return. If you qualify for the reciprocal agreement, you will need to remove the automatic calculation. To do so, log into your account and create the Michigan Resident return. Then, after completing your Michigan return entries, create a return for the nonresident reciprocal state.
What if my other state is Illinois?
If the other state is Illinois, go to
- State Section
- Illinois Nonresident Return
- Edit
- Part Year and Nonresident Questions
- Complete this section indicating you were a resident of Michigan during the tax year.
The Illinois wages need to be removed from the return as well. To do so, please go to:
- Federal Section
- 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 your employer.
What if my other state is Indiana?
If the other state is Indiana, go to:
- State Section
- Indiana Nonresident Return
- Edit
- County Information
Complete the questions indicting you lived in Michigan and the county where you worked. Go to Indiana Reciprocal return (IT-40RNR) and answer the questions.
Please note that you may still be subject to county tax on the income you 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 your employer.
What if my other state is Kentucky?
If the other state is Kentucky, go to
- State Section
- Kentucky Nonresident Return
- Edit
- Basic Information
Go to the Residency Information and complete the questions indicting you are a resident of a reciprocal state. Complete one form 740-NP-R for the taxpayer and one for the spouse (if applicable). To claim exempt from Kentucky withholdings in the future, file form 42A809 with your employer.
What if my other state is Minnesota?
If the other state is Minnesota, go to:
- State Section
- Minnesota Nonresident Return
- Edit
- Basic Information
- Select your state of residency
Continue to 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. You can find this by going to Summary/Print > Adjusted Gross Income). Continue through the state return. To claim exempt from Minnesota withholdings in the future, file form MWR with your employer.
What if my other state is Ohio?
If the other state is Ohio, go to:
- State Section
- Ohio Nonresident Return
- Edit
- 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
Click 'Continue' at the bottom of the screen. Next, go to 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 your employer.
What if my other state is Wisconsin
If the other state is Wisconsin, go to:
- State Section
- Wisconsin Nonresident Return
- Edit
- Basic Information
- Select Your Resident State (click 'Continue' at the bottom of the page to save)
- Continue to the Legal Residence Questionnaire. Select 'Yes' to complete the questionnaire. Click 'Begin' for the Residency and Non-residency Questions.
- Complete this section as instructed.
Once the above steps are completed, go to:
- Federal Section
- 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 your employer.
NOTE: The nonresident returns will refund all or most of the taxes withheld. The resident return will calculate an amount owed (usually).