Question

1. What would be deductible if you lived and worked in MI but work sent you to WI for a temporary assignment?

What if while in WI, you decided to quit your job and instead work for them as an independent contractor?

What if you moved to WI permanently and continued your work there as an independent contractor?

2. What did the TCJA change about the meals and entertainment deduction?

3. Home-office deduction - Pete works for his employer 100% of the time from his home office. There is a desk for him at work but he is allowed to choose where he works from. He also operates a side business for which he is self-employed. He works from the same home office and does all of his self-employed related work there. Is Pete allowed a home-office deduction for either, both or none of these situations?

Answer 1

Answer: Question 1:

PROCEDURES FOR WISCONSIN RESIDENTS

A. Filing a Wisconsin Income Tax Return

If, while you are domiciled in Wisconsin, you earn income that is subject to reciprocity, you must report such income on your Wisconsin income tax return (Form 1 for a full-year Wisconsin resident or Form 1NPR for a part-year resident or nonresident).Individuals domiciled in Wisconsin who earn income in another state that is subject to reciprocity (that is, the income is not taxable by that state) may not claim a credit on their Wisconsin income tax returns for tax paid to the other state on that income.

If you earn income in Illinois, Indiana, Kentucky, or Michigan and it is taxable by that state, you may claim a credit on your Wisconsin income tax return for net income tax paid to that state.

Note: You may not claim credit for other taxes paid such as city tax or county tax, unless those taxes are paid directly to the state.

B. Other State's Income Tax Return

You are not required to report income subject to reciprocity on a tax return for the reciprocal state (that is, Illinois, Indiana, Kentucky, or Michigan). Therefore, if your only income from a reciprocal state is income that is subject to reciprocity, you are not required to file an income tax return with such reciprocal state. (Exception:

You must file an Indiana income tax return if the income is subject to an Indiana county tax.) However, if your employer withheld income tax for such reciprocal state from your wages, you will have to file an income tax return with that state to obtain a refund of tax withheld.

C. Withholding and Estimated Tax Payments

You may request your employer to stop withholding income tax for the reciprocal state. Contact your employer or the reciprocal state's department of revenue to obtain the required form.

You may also request your employer to withhold Wisconsin income tax from your wages. However, an employer outside Wisconsin may not be required to withhold Wisconsin tax. If your employer does not withhold Wisconsin income tax, you may be required to make estimated tax payments.Estimated tax payments are generally required if you expect your Wisconsin income tax return to show a balance due of $500 or more. You may be charged underpayment interest if the required estimated tax payments are not made.

PROCEDURES FOR NONRESIDENTS OF WISCONSIN

A. How to Prevent Withholding
Individuals domiciled in Illinois, Indiana, Kentucky, or Michigan and employed in Wisconsin should file
Form W-220, Nonresident Employee's Withholding Reciprocity Declaration, with their Wisconsin employers to stop the withholding of Wisconsin income tax from their wages subject to reciprocity. This exemption from withholding will remain in effect as long as the individual is subject to reciprocity.
B. Filing a Wisconsin Income Tax Return
A nonresident or part-year resident of Wisconsin must file a Wisconsin income tax return if his or her gross
income from Wisconsin sources is $2,000 or more. Gross income does not include income that is not taxable to Wisconsin because of reciprocity.
Therefore, if you are domiciled in Illinois, Indiana, Kentucky, or Michigan for the taxable year and your only income from Wisconsin sources is income that is subject to reciprocity, you are not required to file a Wisconsin income tax return for such taxable year. However, if Wisconsin income tax was withheld from your wages, you must file a Wisconsin return (Form 1NPR) to get a refund of the withheld tax.