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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
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Experience:  15+ years tax preparation and tax advice.
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State of Michigan taxes Earned long term disability payments

Resolved Question:

State of Michigan taxes: Earned long term disability payments from a third party ( insurance co.) payor from out of state emplorer - TN. Reported on W-2 as third party sick pay. Moved to MI in april 2010, about same time the payments began. I think I have to report as income on MI Tax but don't really want to! Need advice. Thanks.

Jeff
Submitted: 3 years ago.
Category: Tax
Expert:  Wendy Reed replied 3 years ago.

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.

 

Hello Jeff,

Unfortunately third party sick pay is not exempt from Michigan tax. As a part year resident, you would be responsible for paying Michigan tax on all income received during your period of MI residency. So if you received the third party sick pay while a resident of MI, even if the pay was earned in connection with work in TN, it would still be taxable to MI. MI has reciprocal state agreements, but not with TN. You would be eligible for a credit for taxes paid to another state if you paid TN tax, but since TN has no tax on wage income, this does not apply.

 

Please let me know if I can assist you further.

Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3345
Experience: 15+ years tax preparation and tax advice.
Wendy Reed and 6 other Tax Specialists are ready to help you

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