Michigan Unemployment Question

[mastertaxguy]

MI Line 11 Instrutions Schedule NR.

I thought the question was whether "Jimmy" would owe MI income tax? A rudimentary review of the MI income tax booklet shows that MI starts with federal AGI. One would assume that the unemployment compensation as reported on the Form 1099-G would be included in that amount. You may then wish to read very carefully the instructions for line 11 of MI Schedule NR, however. Need I repeat that suggestion?

As for "Jimmy" or "Tony" or "Whoever" ---- most states will allow a state income tax credit to a resident for income taxes paid to a "foreign" state. The real state of residence will have zilch to do with the tax, if any, which MI might impose. For a state like TN, with no state income tax, you can't get much lower than zero. For ANY state which has an income tax, there would be a strong likelihood of a tax credit based upon the income/taxes relevant to MI.

Granted, your "Jimmy" would never pay any TN income tax. Nor could he receive a TN income tax credit based upon the MI taxes paid. DUH! But that issue is totally irrelevant to any taxes that might (separately) be imposed by MI.

Why not just download the MI tax software and see what falls out? I have not prepared a MI return in several years, but a very cursory glance indicates "Jimmy" is likely off the hook as for owing any MI taxes (think line 11. . . .), but he MAY still need to file a non-resident MI return to keep the Lansing vultures away.

I'm sure there are some folks on these boards who have MI tax experience and could clarify what you need to do?

FE

The "instructions" for Michigan Schedule NR make it very clear that while unemployment is part of Federal AGI (starting point for a Michigan individual income tax return), "This income [unemployment] is allocated to the state you lived in [sic] when you received it."

Thus, for a Tennessee resident receiving unemployment compensation from the Michigan Unemployed Insurance Agency, there is NO Michigan tax due and frankly no need to file a Michigan tax return, regardless of receipt/issuance of 1099-G's from the Michigan UIA.

My practice is Michigan based. I have taken this position with out of state clients for years.

[Snaggletooth]

Thank You

Mastertaxguy thank you for digging this out of the catacombs, hidden deep in the Michigan instructions.
And for staying relevant and focused. Good luck in Michigan - bright future there.