To clarify,
The unemployment issued by Illinois would be taxable on an Illinois State Return, whether received as a resident or non-resident.
I see no Arizona "subtraction" for unemployment.
I believe the advise might have been to deduct the Illinois Tax you pay on the unemployment.
Can you supply the source for deducting the unemployment amount?
According to the State of Illinois:
"Unemployment compensation included in your federal adjusted gross income is taxable to Illinois if
- you earned it while you were an Illinois resident or
- you received it from the Illinois Department of Employment Security as a nonresident."
Illinois
According to the State of Arizona:
"State Taxes on Unemployment Benefits: Arizona taxes unemployment compensation to the same extent that it's taxed under federal law."
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