Live and conduct all work in Michigan, but my Nebraska employer witheld NE state taxes.

Forum|Forum|2 years ago
February 25, 2024
1 reply
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I live full time in Michigan, but also teach as an adjunct instructor for a college in Nebraska (100% online, all work completed in Michigan). Michigan is taxing me for this income. Do I also file a NE state tax return and try to recoup the money that was withheld from my check? Will turbo tax walk me through this?

TomD8

Employee

Nebraska is one of a handful of states with a "convenience of the employer rule" regarding remote work performed by a non-resident. Here is Nebraska's law:

"If the nonresident's service is performed without Nebraska for his or her convenience, but the service is directly related to a business, trade, or profession carried on within Nebraska and except for the nonresident's convenience, the service could have been performed within Nebraska, the compensation for such services shall be Nebraska source income."

https://www.law.cornell.edu/regulations/nebraska/316-Neb-Admin-Code-ch-22-SS-003

If that law applies in your case, then your remote income is taxable by NE. It is also taxable by MI, because your resident state can tax all your income regardless of its source.

You'll be able to claim a credit on your MI return for the taxes paid to NE on the dollars taxed by both states, so in effect you won't be double-taxed.

In TurboTax, be sure to complete the non-resident state return before the home state return, so that the program can calculate and apply the credit.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

omahablueAuthor

Can I elaborate a little further in regards to the convenience law? The college does not provide me with a classroom, office, computer or any kind of supplies. Nor would they if I lived in Nebraska. This is a 100% virtual job and does not actually take place in Nebraska. In fact some of the students are over seas. My working in Michigan is not a matter of convenience for me, but just the nature of the job. Considering this, do I still fall under the convenience law?

TomD8

Employee

@omahablue --

I can't do any more other than give you the wording of the applicable Nebraska law. If you're unsure if the law applies to you, then you may want to contact the Nebraska Dept. of Revenue for guidance. Here's a link with their contact information:

https://revenue.nebraska.gov/about/contact-us

**Answers are correct to the best of my ability but do not constitute tax or legal advice.