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Screen MJCW2 - Michigan Cities Wages and Wage Allocations (1040)

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Overview

Use this screen to allocate a part-year/nonresident’s wages based on the number of days lived and/or worked in the city. In order to include the W-2 information in the Salaries & Wages Report, an entry
must
 be made in the
Employer’s name
 field in this screen.

Federal W2 information

Information in this section transfers from the federal
W2
 screen. Only enter information in the fields in this section to change data for city purposes.
Wage code
Military wages (codes 2 and 4) are not taxable to Michigan cities and are automatically excluded from taxable income.
W-2 Box 14
Code
7
 entered in the statement window is used to indicate the amount of SUB pay included in the Wages, tips line on Form W-2. SUB pay amounts entered in this statement window are excluded from taxable income on all Michigan City returns.
Street address of actual work location and dates worked at the location
In the statement window, enter the actual address of the work location, if it differs from the information on the W-2 and the dates worked at that location. This information prints on the Salaries & Wages Report.
Excludable wage amount
Enter the amount of wage to be excluded from the taxable income for a resident return.
Explanation/reason for exclusion
Enter the reason for excluding the amount entered in the
Excludible wage amount
 field.
Example:
 Pension payment reported on a W-2.

Wage allocation

Use this section to allocate a part-year/nonresident’s wages based on the number of days worked in the city as a nonresident and/or lived in the city as a resident. UltraTax CS calculates a separate W2 Wage Allocation Worksheet for each employer per city. City wage allocations are calculated based on the city code from the federal
W2
 screen, or as entered in this section.
note
Use the following nonresident and part-year resident return guidelines to properly allocate local wages.
  • Nonresident returns:
     Michigan cities only accept the reported amount in the Local wages box on the employee’s W-2 as the reported amount for a nonresident return if you give an explanation for the calculation used to determine the amount. Enter the excludable amount and the reason for the exclusion in the
    MJCW2
     screen. Michigan cities need a supporting calculation for the amount in the Local wages box because this amount is usually determined by when the bookkeeper started withholding city taxes and may not represent the actual number of days the employee worked in the city due to payroll start dates and notification of the need to withhold city taxes. For nonresident returns with W-2 local wage amounts that are different from federal wage amounts due to days worked in and out of the city, apportion nonresident wages by the number of days/hours worked in the city to the number of days/hours worked for the entire period that the wages were earned. The number of days for a full year is usually 260. Enter the number of days/hours paid, less vacation, holiday, and sick days and days/hours worked in the city with the city code for the nonresident city in the
    MJCW2
     screen. UltraTax CS completes an allocation worksheet for each nonresident city code entered.
  • Part-year returns:
     For part-year returns with W-2 local wage amounts that are different from federal wage amounts, many cities don’t require that you fill out the part-year schedule if the part-year resident has only resident taxable wages to the city. However, if the part-year resident has both resident and nonresident taxable wages to the city, complete the wage allocation section in this screen. For part-year returns with W-2 local wage amounts that are different from federal wage amounts, apportion wages by the number of days/hours worked in the city as a resident and nonresident, to the number of days/hours worked for the entire period that the wages were earned. The number of days for a full year is usually 260. Enter the total number of days/hours paid and the number of vacation, holiday, and sick days. Also enter days/hours worked in the city as a nonresident, and days/hours worked as a resident with the city code for the part-year city. UltraTax CS completes an allocation worksheet for each part-year city code entered.
  • Detroit part-year returns:
     Detroit wages earned during the nonresidency period are to be allocated by the number of days worked in the city as a nonresident to the total number of days worked during nonresidency. Use the
    Detroit part year returns
     fields to complete page 2 of Form 5121, City Schedule W.
Vacation, holiday, and sick days or hours paid/Actual number of days or hours worked (Force)
To calculate wage allocation as a nonresident, enter the number of days or hours worked inside the city as a nonresident. If no percent is entered for a part-year resident, the default is 100 percent taxable as a resident. If no percent is entered for a nonresident, the default is 100 percent taxable as a nonresident.
Wages earned as a Detroit resident
To allocate wages for a part-year Detroit resident, enter income earned during residency in the wages earned as a Detroit resident field. Enter wages earned during the nonresidency period in the nonresident wages to allocate the field. UltraTax CS multiplies the nonresident wages amount by the percentage of days worked inside the city as a nonresident to the actual number of days worked.
Nonresident wages to allocate
Enter wages earned during the nonresidency period. UltraTax CS multiplies this amount by the percentage of days worked inside the city as a nonresident to the actual number of days worked.
City Code/… / Days/Hours Worked As Resident (Part-year only)
Data in the
City Code
 and
Local W/H (W-2, box 19)
 fields transfer from the State and City Information section of the federal
W2
 screen, or can be entered in this screen. The
City Code
 field must be completed to calculate the part-year or nonresident wage allocation.

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