Michigan Retirement Question

[Corduroy Frog]

Attention Michigan Preparers. Is a pension from Michigan sources taxable to Michigan for a non-resident?

I'm certain that the Supreme Court says it is not - at least in general. However, Michigan may have something rumored that if the non-resident is visitng or working in Michigan at the time of receipt, that pension money received during that time is taxable.

Taxpayer retired from Michigan 3-4 years ago, moved to Tennessee, and receives $37,000 annually from a Union fund in Michigan. Last year, one of his previous employers called him and begged him to work on a construction job. He was in Michigan 19 weeks, and earned $25,000 while he was there.

There is no question the $25,000 was taxable to Michigan, as these were Michigan wages and had Michigan tax withheld. However, my question concerns the $37,000 pension from a Michigan source for the 19 weeks he was there. The allocated amount for 19 weeks is some $13,000 plus.

Does Michigan have a right to tax him on $13,000 of the pension received while working in Michigan??

[kathyc2]

Q&A from MI should answer your questions:

https://www.michigan.gov/documents/ors/FAQs_-_Pension_Tax_V1_12-6-11_370830_7.html#Cat_4_-_Q1

[Gary2]

It's Federal law and not a Supreme Court decision that says that states can't tax income from qualified plans on non-residents, even if the investment into the plan resulted from work done within that state.

But I think the question you should be asking is whether or not the taxpayer became a part time resident of MI during those 19 weeks.

[Corduroy Frog]

A Valid Question

Good thinking Gary. How could he work in MI for 19 weeks and NOT sleep somewhere in the state as a part-year resident? That question has more pernicious results than my original post.

A matter of definition, I suppose. I know that he never "moved" his personal effects back to Michigan, changed his license tag, voter registration, mailing address or anything of the sort, so I would say "no." The state of Michigan, however, may have different ideas but I'm not so sure they would be fair or contain substance.