Live in Michigan, Work Remotely for a Pennsylvania Employer: Who Taxes You?
Answer
Pennsylvania taxes you even though you never work there. Its convenience-of-the-employer rule sources your remote workdays back to the employer's state unless the job genuinely cannot be done in Pennsylvania. You file a Pennsylvania nonresident return and a Michigan resident return, claiming the credit at home.
Last verified
A handful of states refuse to accept the ordinary sourcing rule for their own employers' remote staff. Pennsylvania is one of them, and its convenience-of-the-employer rule is the reason this page does not end with "only your home state taxes you".
Pennsylvania sources a nonresident's remote workdays to Pennsylvania when the employee works from home for their own convenience rather than at the employer's requirement. The reciprocal agreements override it: a New Jersey resident working remotely for a Pennsylvania employer owes Pennsylvania nothing.
The rule is not an administrative preference. Pennsylvania applies it under 61 Pa. Code §109.8, and the burden of showing that remote work is an employer necessity rather than an employee convenience falls on you and your employer, not on Pennsylvania Department of Revenue.
A Michigan resident taxed by another state on the same income claims the credit for taxes paid to other states on Form MI-1040 (credit for income tax imposed by another state). The credit is capped at the Michigan tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
Pennsylvania also has a layer below the state one, and it is the layer that survives every agreement: Pennsylvania's Act 32 earned income tax is levied by municipalities and school districts across the state, and Philadelphia levies its own wage tax on residents and on nonresidents who work in the city. None of it is covered by the reciprocal agreements, and Philadelphia's nonresident wage tax applies from the first dollar.
What you file
- 1Nonresident return · PennsylvaniaForm PA-40 (nonresident)
File the Pennsylvania nonresident return FIRST — you need the Pennsylvania tax figure before you can complete Michigan.
- 2Resident return · MichiganForm MI-1040 (credit for income tax imposed by another state)
File a Michigan resident return reporting all income, then claim the credit for tax paid to Pennsylvania. The credit is capped at what Michigan would have charged on that same income, so if Pennsylvania taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Michigan | Pennsylvania | |
|---|---|---|
| Taxes wages | Yes — flat | Yes — flat |
| Reciprocity partners | 6 (Form MI-W4) | 6 (Form REV-419) |
| Convenience rule | No | Yes — general rule |
| Nonresident return | Form MI-1040 with Schedule NR | Form PA-40 (nonresident) |
| Credit for other-state tax | Form MI-1040 (credit for income tax imposed by another state) | Schedule G-L |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | Yes |
| Revenue department | Michigan Department of Treasury | Pennsylvania Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Pennsylvania and working in Michigan gives:Home state only.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: Michigan → PennsylvaniaBoth states — credit offsets the double tax
- 1099 contractor: Michigan → PennsylvaniaHome state, plus the client state if you work there
- Moved mid-year: Michigan → PennsylvaniaTwo part-year returns
Other Michigan pairs
Questions people actually ask
I live in Michigan and work remotely for a Pennsylvania employer. Which state do I pay?
Pennsylvania taxes you even though you never work there. Its convenience-of-the-employer rule sources your remote workdays back to the employer's state unless the job genuinely cannot be done in Pennsylvania. You file a Pennsylvania nonresident return and a Michigan resident return, claiming the credit at home.
Which state should my employer be withholding for?
Both, potentially — and that is the problem. Pennsylvania expects withholding because it claims the income, while Michigan taxes you as a resident. Many employers withhold only for Pennsylvania, which leaves a Michigan balance due at filing unless you make estimated payments during the year.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Michigan gives residents a credit for tax paid to Pennsylvania on the same income, claimed on Form MI-1040 (credit for income tax imposed by another state). The credit is capped at the Michigan tax on that income, so if Pennsylvania taxes it more heavily the excess is not refunded by either state.
How current is this?
The Michigan and Pennsylvania rules on this page were last checked against Michigan Department of Treasury and Pennsylvania Department of Revenue on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Michigan Department of Treasury — individual income taxaccessed 2026-08-07
- Pennsylvania Department of Revenue — individual income taxaccessed 2026-08-07
- Pennsylvania — Form REV-419accessed 2026-08-07
- Pennsylvania Personal Income Tax Guide — Income Subject to Tax Withholdingaccessed 2026-08-07