It depends. Normally you would only have an obligation to file a state return in your Home of Record State. If you have other income however in the State of Illinois, you would nee to file an Illinois non-resident return or if your military pay had Illinois withholding tax withheld, you would file an Illinois non-resident return to receive your Illinois withholding refunded back to you.
Now to exclude your military pay. It depends on how you recorded the W2. After you entered your W2, there is a screen that says Let's check for uncommon situations. Here you check the Box that says Active Military Duty.
Now as you prepare your Illinois state return, there should be an income allocation screen for your W2 income that appear as you navigate through the return. Here you would exclude your military pay and report income remaining earned elsewhere. If this is all military pay, put a zero. Now, you should see a total subtraction of your military pay in Box 41 of your schedule M. Also you should see military pay being excluded in Box 21 of Schedule M.
Check over your answers in the MY INFO section of your return. First of all, be sure to indicate you are active duty military. Be sure to enter the Home of Record state as your resident state and Illinois will be reported as the State where you are stationed. This will indicate that Illinois is a non-resident state to you for income tax reporting purposes.
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