L.S. Posted April 17, 2007 Report Share Posted April 17, 2007 Have a client who lived in Iowa from Jan. 1 - July 31, 2006 - then moved to Michigan. I filed an Iowa return with IA126 for the part-year resident credit. I filed a MI-1040 with Schedule 1, Schedule W and Schedule NR. Rec'd first letter from State of Michigan Dept. of Treasury asking us to provide documentation to substantiate he was domiciled in another state so provided voter registration in Iowa and Iowa driver's license. Then rec'd second letter from Michigan stating that credit for tax imposed by another state disallowed and only Michigan residents are eligible for this credit. Final determination. If we disagree we can appeal. I am confused. I thought I filed this as a part-year resident. Any help would be appreciated. Thank you. Quote Link to comment Share on other sites More sharing options...
lbbwest Posted April 17, 2007 Report Share Posted April 17, 2007 You shouldn't have to worry about this today! Your post confused me, if he moved to Michigan, then wasn't he a part year resident? IF you filled out the NR correctly you would have split his income between Iowa and MI, you wouldn't then have ALSO received a credit for taxes that he paid when it wasn't taxed in Michigan on the Iowa income. Michigan is mercilous, broke and run by computers; good luck! Quote Link to comment Share on other sites More sharing options...
taxtrio Posted April 17, 2007 Report Share Posted April 17, 2007 Have a client who lived in Iowa from Jan. 1 - July 31, 2006 - then moved to Michigan. I filed an Iowa return with IA126 for the part-year resident credit. I filed a MI-1040 with Schedule 1, Schedule W and Schedule NR. Rec'd first letter from State of Michigan Dept. of Treasury asking us to provide documentation to substantiate he was domiciled in another state so provided voter registration in Iowa and Iowa driver's license. Then rec'd second letter from Michigan stating that credit for tax imposed by another state disallowed and only Michigan residents are eligible for this credit. Final determination. If we disagree we can appeal. I am confused. I thought I filed this as a part-year resident. Any help would be appreciated. Thank you. You can only claim the credit for tax paid for another state if your are a full year Michigan resident who is also being taxes again by another state. Michigan is correct, a part-year resident subtracts income earned before becoming a resident of Michigan using SchNR and Sch1. Prorates the exemption allowed accordingly. You cannot double dip. If you don't watch your software... ATX will automatically put the tax paid to another state on page 2 of the MI 1040 and calculate the credit even if you are doing a Part year form. That's probably where your problem started. IMHO Pam Quote Link to comment Share on other sites More sharing options...
L.S. Posted April 17, 2007 Author Report Share Posted April 17, 2007 Pam - thank you very much! :D Quote Link to comment Share on other sites More sharing options...
taxtrio Posted April 17, 2007 Report Share Posted April 17, 2007 Pam - thank you very much! You're Welcome... Happy April 17th!! Pam Quote Link to comment Share on other sites More sharing options...
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