What Is the Michigan Schedule NR and Who Must File?

The Michigan Schedule NR is a tax form for nonresidents and part-year residents to calculate the portion of their income subject to Michigan’s income tax. It accompanies the main MI-1040 form and ensures individuals are taxed only on income earned from Michigan sources or while living in the state. The form must be completed and attached if your residency status and income sources require it. Schedule NR works by isolating Michigan-specific income from total income, a necessary step before your final tax liability can be determined.

Determining Your Filing Requirement

A person’s requirement to file Schedule NR hinges on their residency status. The Michigan Department of Treasury defines a nonresident as someone who lives outside Michigan for the entire year but has income from within the state. A part-year resident is an individual who moved into or out of Michigan during the tax year.

Nonresidents must file a Michigan tax return with Schedule NR if their income from Michigan sources exceeds their prorated exemption allowance; this means even a small amount of Michigan-source income could trigger a filing requirement. Part-year residents must file if they meet the general filing requirements, which involves having total income above a certain threshold. This includes all income earned while a resident plus any Michigan-source income earned as a nonresident.

Identifying Michigan-Source Income

For nonresidents, Michigan-source income is any compensation earned for services performed within the state’s borders. This includes:

• Wages, salaries, tips, and commissions
• Income or loss from a business or farm operating in Michigan
• Rental income from real estate located in Michigan and gains or losses from its sale
• Income passed through from partnerships or S corporations that conduct business in Michigan

Part-year residents have a different calculation. They must report all income earned from any source worldwide during the period they lived in Michigan. They must also include any income from Michigan sources during the portion of the year they were a nonresident. For example, if an individual lived in Michigan for six months and then moved but continued to receive rental payments from a Michigan property, they would report all their income for the first six months and only the rental income for the second six months.

Information and Documents for Schedule NR

To complete Schedule NR, you should gather several documents. The official, current-year form is available on the Michigan Department of Treasury’s website. Necessary documents include:

• A completed federal income tax return, such as Form 1040
• All income-reporting documents, including Form W-2 and various Form 1099s
• Schedules K-1, which report income from partnerships or S corporations
• Records like lease agreements or utility bills to establish the exact period of Michigan residency

When filling out the form, Column A, titled “Total Income,” will mirror the income figures from the federal return. Column B, “Michigan Income,” is where you enter only the portion of each income type that is attributable to Michigan.

Calculating Your Michigan Taxable Income

After filling in all income and adjustment lines, you will total both Column A (Total Income) and Column B (Michigan Income). The total of Column B is then divided by the total of Column A to produce the Michigan income percentage. This percentage is used to prorate your exemption allowance.

You will multiply your total personal exemption amount, found on the MI-1040 form, by the Michigan income percentage from Schedule NR. The resulting figure is your prorated exemption allowance, which you can then subtract from your Michigan-sourced income. The final taxable income figure from Schedule NR is transferred to the designated line on the MI-1040 to continue the calculation of your overall tax liability.