This is correct filing. Tennessee does not have a true income tax return, but interest and dividends in Tennessee may be taxable above a certain amount. The TN return does not have a part-year section; rather, any interest received while not a TN resident is exempted from TN tax. Please click on the following link for more information: Hall Individual Income Tax Return Kit, and on page 3, you will note this excerpt on who must file the TN return:
A person who moved into or out of Tennessee during the year and whose taxable interest and dividend income during the period of Tennessee residency exceeded $1,250 ($2,500 if married, filing jointly). (Italics added)
Therefore, your Illinois interest and dividend income is properly non-taxable in Tennessee, but all of your interest and dividend income for the year is reported to determine the taxable amount.
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