The returns are calculated correctly. The Schedule NR on the Illinois (IL) return is completed correctly and exemptions are allowed before taxing the income.
The IL return reduces the wage income by an exemption allowance on Schedule NR and so the actual income being taxed is lower than your wages as you discovered. When you go to the Indiana (IN) return the lower income is being used to determine if the tax to IN is below the tax charged in IL.
The calculations are correct on both tax returns. The credit may be less than you were expecting.
State Returns - Your resident state requires you to include all worldwide income. Assume both states require income tax returns to be filed:
- Report the income on each state return that is from the nonresident state
- Report it on your resident state and receive credit for taxes paid to another state.
Credit for taxes paid to another state is allowed by a resident state when the same income is being taxed to another state. Your resident state does not want you to pay tax twice on the same income. The credit that is allowed will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
Please update here if you have additional questions.
@Mikes20222022
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