How state taxes work
Best Answer: Since you have moved to TN, the State of MI is no longer allowed to tax your wages as of the date that you became a TN resident.
File a part-year MI resident return for the year that you moved, showing ONLY the income you earned while living and working in MI. The income you earned after you moved is no longer subject to MI State income taxes. You should also notify your employer to stop withholding MI state taxes as you are no longer a MI resident or working in MI.
The location of your employer is irrelevant to the State's ability to tax your wages. You must either be domiciled in the state or perform work for compensation within the state's borders to be subject to its tax
laws. For most citizens, the issue of domicile is automatic when you move from one state to another. Your permanent physical presence in the new state automatically changes your domicile.
The only persons who are not affected this way are military personnel on extended active duty and stationed out of state or college students attending school out-of-state. They maintain domicile in their home state automatically unless they take positive actions to change their legal domicile to a state where they have an actual physical presence. The most clear-cut evidence of change of domicile for those folks is registering to vote in the new state, along with getting a drivers license and registering their car in the new state -- none of which are normally required of those folks due to their special legal status.Source: answers.yahoo.com