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2020 GRAND RAPIDS FORM GR-1040 INSTRUCTIONS FOR NONRESIDENTS
All W-2 forms showing income earned in Grand Rapids and/or tax capital losses may be carried over to future tax years. The capital loss
withheld for Grand Rapids must be attached to the return. carryover for Grand Rapids may be different than the carryover for federal
Report on page 1, line 1, column B, the total excluded wages from Line 16 income tax purposes.
of the Wages, Excludible Wages and City Tax Withheld schedule. Deferred capital gain income from installment sales and like-kind exchange
All excluded wages must be documented on the Wages and Excludible of property located in Grand Rapids are taxable in the year recognized on
Wages Schedule and listed, by employer, on the Excluded Wages and Tax the taxpayer’s federal income tax return.
Withheld Schedule on Form GR-1040, page 2. On the Wages and Flow through income or loss from an S corporation reported on a
Excludible Wages schedule, line 7, list the address of the work station nonresident’s federal Schedule D is excluded on the Exclusions and
where you performed the work for the employer and on line 19, enter the Adjustments to Capital Gains or (Losses) schedule Attach copies of
reason the wages are excludible. federal Schedule K-1 (Form 1120S).
Do not use box 18 of W-2 form to report taxable wages or to allocate Use the Exclusions and Adjustments to Capital Gains or (Losses) schedule
wages, use all wages reported on your federal return as the allocation to compute exclusions and adjustments to capital gains. NOTE: A common
basis. A separate wage allocation must be completed for each employer. error on a nonresident return is failure to complete the Exclusions and
Wages are normally allocated using the actual number of days or hours Adjustments schedule to exclude the capital loss carryover reported on the
worked in and outside of Grand Rapids during the tax year for an employer. taxpayer’s federal income tax return.
Vacation time, sick time and holidays are not included in total days worked Line 8 – Other Gains or (Losses)
in arriving at the wage allocation percentage. Vacation pay, holiday pay, A nonresident’s other gains and losses are included in taxable income to
sick pay, bonuses, severance pay, etc. are taxable to same extent as the extent the gains or losses are from property located in Grand Rapids.
normal earnings. Deferred other gains and losses from installment sales and like-kind
100% Earned in Grand Rapids. All wages, salaries, tips, sick pay, exchanges of property located in Grand Rapids are taxable in the year
bonuses, deferred compensation, severance pay, and other compensation recognized on the taxpayer’s federal income tax return. Deferred other
(Form W-2, boxes 1 and 8) is taxable to nonresidents who worked 100% of gains must be supported by attaching a copy of federal Form 6252 and/or
the time in Grand Rapids. Form 8824.
Wage Allocation. Nonresidents who performed only part of their services Flow through income or loss from an S corporation reported on federal
for an employer in the Grand Rapids must allocate their wages. Use the Form 4797 is excluded on the Exclusions and Adjustments to Other Gains
Nonresident and Part-Year Resident Wage Allocation section of the Wages and (Losses) schedule. Attach copies of federal Schedule K-1 (Form
and Excludible Wages Schedule. 1120S).
Wage Allocations on Commissions, Etc. A nonresident salesperson paid Nonresidents reporting other gains and losses must attach a copy of
on a commission basis or other results achieved should allocate wages federal Form 4797. Use the Exclusions and Adjustments to Other Gains
based on commissions received or other results achieved attributable to and Losses schedule to compute exclusions and adjustments to other
efforts expended in Grand Rapids. A nonresident insurance salesperson gains and losses reported on the federal income tax return. On line 4 of the
paid sales commissions and renewal commissions should allocate schedule enter the total excluded other gains or losses and also enter this
compensation on the following basis: Allocate commissions from life, total on page 1, line 8, column B.
health, accident and vehicle (auto) insurance based on the location Line 9 – IRA Distributions
(residence) of the purchaser. Allocate commissions from group insurance That portion of a premature IRA distribution that was deducted from Grand
based on the location of the group. Allocate commissions from fire and Rapids taxable income in the current or a prior tax year (reported on Form
casualty insurance based on the location of the risk insured. 1099-R, box 7, distribution code 1) are taxable to a nonresident. IRA
Line 2 – Interest distributions received after age 59 ½ or described by Section 72(t)(2)(A)(iv)
Non-business interest income of a nonresident is not taxable. Exclude all of the IRC are not taxable.
non-business interest income. No explanation needed. Line 10 – Taxable Pension Distributions
Interest income that is business income from business activity in Grand Premature pension plan distributions (those received by a nonresident prior
Rapids is taxable and must be reported. Attach a schedule showing source to qualifying for retirement) are taxable to the same extent the normal
and computation of taxable and nontaxable interest income. wages from the employer are taxable.
Line 3 – Dividends A nonresident remaining employed by the particular employer in Grand
NOT TAXABLE. Exclude all dividend income. No explanation needed. Rapids may not exclude amounts received from deferred compensation
Line 4 – Taxable Refunds, Credits or Offsets plans that let the employee set the amount to be put aside and do not set
retirement age or requirements for years of service. These plans include,
NOT TAXABLE. Exclude all. No explanation needed. but are not limited to, plans under Sections 401(k), 457 and 403(b) of the
Line 5 – Alimony Received Internal Revenue Code (IRC): Amounts received before the recipient could
NOT TAXABLE. Exclude all. No explanation needed. retire under the plan provisions, including amounts paid on separation,
Line 6 – Profit or (Loss) from a Business, Etc.
Profit or loss from the operation of a business or profession is taxable to
the extent it results from work done, services rendered or other business withdrawal or discontinuance of the plan. Amounts received as early
activities conducted in Grand Rapids. Report on page 1, line 6, column A, retirement incentives, unless the incentives were paid from a pension trust.
business income reported taxable on your federal return. Form 1099-R, box 7, code 8, Excess contributions or excess deferrals
The Exclusions and Adjustments to Business Income schedule is used to taxable in current tax year are taxable to a nonresident to the same extent
exclude business income. The total excluded business income from line 5 and on the same basis as the normal earning from the specific employer
of this schedule is also entered on page 1, line 6, column B. If a business are taxable. Note: Form 1099-R, box 7, code P, reports excess
operates both in and outside of Grand Rapids, the taxable profit or loss is contributions or excess deferrals taxable in the prior tax year and may
determined using the three factor Business Allocation Formula. require a nonresident to file an amended return for the prior tax year.
Where no work is done, services rendered or other business activity is See Line 10 under “Residents” for additional information on nontaxable
conducted in Grand Rapids, the profit or loss is entirely excluded. pension and retirement benefits.
Complete the Exclusions and Adjustments to Business Income schedule to Excludible pension distributions are listed on the Exclusions and
exclude profit or loss from the operation of a business. Adjustments to Pension Income schedule. Enter the total excluded pension
A Grand Rapids net operating loss carryover from the previous tax year is distributions on the last line of the schedule and also enter the amount on
reported on page 1, line 16, column C. See instructions for line 16. page 1, line 10, column B.
Line 7 – Capital Gains or (Losses) Line 11 – Rental Real Estate, Royalties, Partnerships, S Corporations,
Capital gains or losses of a nonresident are included in taxable income to Estates, Trusts, Etc.
the extent the gains or losses are from property located in Grand Rapids. All income reported on the federal Schedule E that comes from business
Capital losses from property located in Grand Rapids are allowed to the activity in Grand Rapids or property located in Grand Rapids is taxable to
same extent they are allowed under the Internal Revenue Code. Unused nonresidents. When an estate or trust has taxable income in Grand Rapids,
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