Author Topic: Help with state taxes - Michigan and Indiana  (Read 604 times)

Sibley

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Help with state taxes - Michigan and Indiana
« on: January 06, 2022, 01:24:37 PM »
I do not understand this, never have, and I need to have parents make estimated payments. Please help.

Parents owned a home in Michigan. Half primary residence, half rental. They sold the house and moved to Indiana mid 2021. There is capital gain tax owned on the sale of the house for Federal (I've got that figured out).

Michigan and Indiana have a tax reciprocity agreement. For purposes of the sale of the house - does Michigan get the capital gain tax payment, or does Indiana? I can do the math, but I can't figure out which state.

travel2020

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Re: Help with state taxes - Michigan and Indiana
« Reply #1 on: January 06, 2022, 07:07:03 PM »
Since the sold property was in Michigan and your parents were presumably Michigan residents for part of 2021, I’m guessing they would need to file Michigan taxes and pay taxes on Michigan source income. They may also need to file Indiana taxes for partial year.

Im not familair with the MI- IN reciprocity agreement but others I know of generally just make it so you don’t get taxed twice (e.g if you paid taxes for one location, you can get credit for those at the other).


SailingOnASmallSailboat

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Re: Help with state taxes - Michigan and Indiana
« Reply #2 on: January 06, 2022, 07:12:33 PM »
Since the house sold in Michigan and your parents were (maybe?) residents there when it sold, I'd think it would be Michigan taking that capital gains tax.

Sibley

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Re: Help with state taxes - Michigan and Indiana
« Reply #3 on: January 06, 2022, 07:29:31 PM »
Yes, they were residents of MI when it sold. Ok, I'll have them do estimated payments for the house to MI, and estimated payments for the IN income to IN, and the Fed capital gain. If I'm wrong, it'll get trued up with the return. And I'm doing really rough calcs, just trying to avoid a penalty.

No, I'm not doing this tax return. I've been saying for years that the year they sell the house, I'm not doing the taxes. I can handle everything except the house. I'm organizing, I'll answer questions, I even found the accountant. But it's not me. I get federal taxes, I can handle state, but throw the reciprocity in and I just don't get it.  I'll take it back next year.

reeshau

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Re: Help with state taxes - Michigan and Indiana
« Reply #4 on: January 07, 2022, 09:16:15 AM »
I've done this move, both ways.  Yes, you have the division right.

 

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