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Are wages earned by a Michigan resident, who is telecommuting from a location in another state, subject to tax in Michigan?

Are wages earned by a Michigan resident, who is telecommuting from a location in another state, subject to tax in Michigan?

Yes. Michigan residents owe tax on all income from wages, salary, or guaranteed payments, no matter where it is earned.

 A Michigan resident may qualify for a non-refundable tax credit for tax paid to another government unit outside of Michigan, including:

  • A nonreciprocal state
  • A local government unit outside Michigan, including tax paid to a city located in reciprocal states
  • The District of Columbia
  • A Canadian province

The credit for taxes paid to another state is not available for:

  • Salaries and wages earned in a state that has a reciprocal agreement with Michigan or
  • Earnings not included in your Michigan taxable income

Credit for Income Tax Imposed by Government Units Outside Michigan Estimator
 

If a Michigan resident erroneously had income tax withheld for a reciprocal state* on salaries and wages earned there, it is the Michigan resident's responsibility to file a nonresident tax return with that state to get a refund of the tax withheld in error.
 

* Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin have reciprocal agreements with Michigan.