MI RES - MA UNEMPLOYMENT ISSUE

[taxbrewster]

I have a client who is a res in MI (earned all income in MI). But received 4k in unemployment from MA. (i know the rules are weird, never worked in MA, but files a claim there)

I can't for the life of me figure out the following...

Should a NR return be filed for MA? I don't think so because it is under 8k for filling requirements.

Therefore, it should not be excluded on of MI return correct?

Then, it is just added to MI AGI, correct. I don't feel a PY/NR sch would be filed for the MI return.

Thanks, it is one of those days, and have not done a MA return before and need a little help.

Thanks in advance.

[Maura]

The 8k is based on all income not just MA income. And MA does tax his unemployment as MA source income.

[taxbrewster]

No, that is the thing. T/P family made 80k, the MA doesn't have a MA source of income. So I am assuming, I complete a MA PR/NR as well as a MI 1040...He would not qualify for a MI part year res because all he did was leave the state to file unemployment.

[Maura]

He will need to file the MA form 1-NR return. And take a credit on the MI

[taxbrewster]

Right, I would take the credit for tax paid (which there was none).

Sooo, then question becomes is that income excludable for the state of MI. I am thinking no, because t/p was res of MI and not a part year, correct.

Thanks again, for talking me through this.

[Maura]

Based on your numbers I show he owes about $189. Did you enter his MI source income on line 14e? (bunny hop)

[taxbrewster]

Well T/P is married and has 3 kids, so it changes the return a bit, but I got, and thank you very much for your help.

[taxtrio]

Michigan full year resident cannot exclude income on the NR. Only part year residents can use that schedule.

Michigan taxes ALL income of a resident unless specifically excludable by Michigan Law. i.e. pension, e bond interest and the like. If MA is taxing him on the unemployment income also then he can claim a tax credit for income tax paid to another state. Because the income is "double taxed" you can reduce the Michigan taxes by claiming a credit for the MA tax paid on the same income. (Must attach a copy of the MA return to the Michigan.)

Taxtrio

Michigan