I am a resident of Illinois, but owns a rental property in Washington DC. The rental income is my only source of income. Which state return should I file?

[katherinewangkw]

I am not a resident of Washington DC, and the rental income from DC is my only source of income. Do I need to report this income on my Illinois state return as well? If yes, does that mean I need to pay double taxes for both DC and Illinois state tax? Thank you!

[Coleen3 · Accepted solution]

You will need to file in the state of Illinois since that is your state of residence.

You must file a DC tax return if:

• You were a resident of the District of Columbia and you were required to file a federal tax return.
• Your permanent residence was in the District of Columbia for either part of or the full taxable year.
• You lived in the District of Columbia for 183 days or more during the taxable year, even if your permanent residence was outside the District of Columbia.
• You were a member of the armed forces and your home of record was the District of Columbia for either part of or the full taxable year.
• You are the spouse of an exempt military person or of any other exempt person such as a nonresident presidential appointee or an elected official.

For more information, see:

https://otr.cfo.dc.gov/page/individual-income-tax-filing-faqs

[katherinewangkw]

Thank you very much! I don’t meet any of the above situations you listed. So does that mean I don’t need to file a DC state return even I have the rental income in DC?

[SweetieJean]

<a rel="nofollow" target="_blank" href="https://gordonjamesrealty.com/resource/dc-area-landlords-must-pay-business-taxes-fees/">https://gord...>

[TomD8]

"So does that mean I don’t need to file a DC state return even I have the rental income in DC?"
That's correct.  DC full year non-residents are not required to file a DC income tax return, DC Form D-40.  (Business taxes are a separate issue.)  But your rental income is fully taxable by your home state of Illinois and must be reported on your Illinois income tax return..

[nksnj]

DC has a unique law that states if you have a rental property in the district then you are required to file a D30 tax return which is an Unincorporated Business Tax Return. This would be in addition to your home state tax return.

[TomD8]

TurboTax does not support DC Form D-30 Unincorporated Business Franchise Tax Return.  There is a fill-in version available on the DC website:

https://otr.cfo.dc.gov/node/1516056

[rics]

Unincorporated businesses in DC refers to LLC taxed as partnership or 1 member LLC taxed as Schedule C

[Critter-3]

Since you have rental income from DC then you should file a non resident DC return to report and preserve what is most likely a loss on the rental.  So in the future when you sell the rental you have the losses on record.