Wage allocation for part-year and nonresidents
Local wage amounts you enter on the federal
W2
screen don't transfer to the MICW2 screen for nonresident and part-year resident returns. Follow these guidelines to allocate local wages. Nonresidents
If the local wages you enter in Box 18 on the federal
W2
screen are different than the federal wages in Box 1, you'll need to provide an explanation for the calculation you used to determine the amount. Enter the Excludable wage amount
and the Explanation/reason for exclusion
on the MICW2
screen. Michigan cities require a supporting calculation for the local wages (box 18) amount because this is usually determined when the bookkeeper started withholding city taxes. That amount 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.If the nonresident return has different local wages due to days worked in and out of city, you'll need to apportion the nonresident wages by the number of days or hours worked in the city to the number of days or hours worked for the entire period that the wages were earned. Do the following on the
MICW2
screen:- Enter the number of days or hours the taxpayer worked, regardless of their residency status, in theActual number of days or hours paidfield. The number of days for a full year is usually 260.
- Enter anyVacation, holiday and sick days or hours paid.
- EnterDays/hours worked inside city as a nonresidentwith theCity codefor the nonresident city.
Part-year residents
Many cities don't require you to complete the part-year schedule if the local wages represent the taxable wages during the time they were a resident of the city. However, if the part-year resident has both resident and nonresident taxable wages to the city, you'll need to complete the Wage Allocation section on the
MICW2
screen.If the part-year return has local wages that differ from the federal wages, you'll need to apportion wages by the number of days or hours worked in the city as a resident and nonresident to the number of days or hours worked for the entire period that the wages were earned. Do the following on the
MICW2
screen:- Enter the number of days or hours the taxpayer worked, regardless of their residency status, in theActual number of days or hours paidfield. The number of days for a full year is usually 260.
- Enter anyVacation, holiday and sick days or hours paid.
- Enter theCity codefor the part-year city.
- EnterDays/hours worked inside city as nonresident.
- EnterDays/hours worked as resident.
UltraTax CS completes an allocation worksheet for each nonresident or part-year city code you enter.
