According to tax.illinois if the fellowship is not taxable by federal it is also not taxable by the state, so I am wondering why it still says IL due some money as fellowship is my only income, and the system does not seems to recognize it correctly
Who says it is not taxable by federal (what's your source)? What makes it not taxable? How was it reported to you that you are even entering it (1098-T, 1099-Misc, 1099-NeC, something else)?
Scholarships, grants and fellowships that pay for qualified educational expenses (QEE - tuition, fees, books and other course materials) is tax free. Scholarship amounts that exceed QEE is taxable income, on the student’s tax return. "Stipends" are usually taxable.
The university tax team said "You have a scholarship US which never has any tax documents issued for it" and the HR office did not take any tax withholding for me. I did not have a W-2 and no 1042-S and I have no idea how to file my state tax as to put my income as "fellowship". Federal I can do it under miscellaneous income