Q. So looking at this again, do I only report to Illinois the basis amount on the 1099-Q as that would be the amount that I would of taken the deduction on not the earnings? The earnings amount is included in the adjusted gross income that carries over from the IRS 1040?
A. Yes. That's how I understand it and that's the way I would enter it on my state's (Ohio) software. So, I assume the IL program is similar.
The one difference is I wouldn't assume the basis on the 1099-Q was all previously deductible (Ohio only allows a $4000 deduction; $2000 until a couple of years ago). I would dig through my past returns to calculate that number.
