@aliely, @MayaD --
Unfortunately, the Illinois-Iowa reciprocal agreement does not extend to unemployment compensation. See this:
https://tax.iowa.gov/iowa-illinois-reciprocal-agreement#:~:text=Examples%20of%20income%20that%20are,....
Also, Iowa's rule is that unemployment benefits that relate to employment in Iowa are taxable by Iowa. See item 12-Nonresidents in this reference:
https://tax.iowa.gov/expanded-instructions/instructions-schedule-ia-126-nonresidents-and-part-year-r...
So your daughter has to file in both states (the unemployment is also taxable by her resident state), but she can claim a credit on her IL return for the taxes paid to IA, so she won't be double-taxed. In TurboTax, be sure to complete the non-resident state return before the home state return, so that the program can properly apply the credit.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
