Farm Rental Income

[hawkeye11]

I recently inherited a small farm in Illinois, but live in Iowa.  Do I need to file a state return now in Illinois?  Do I report the rental income and pay taxes on it in both states?

[MaryK4 · Accepted solution]

An Illinois nonresident must file Form IL-1040 and Schedule NR if you earned enough taxable income from Illinois sources to have a tax liability ( i.e., your Illinois base income is greater than your Illinois exemption allowance- see

2021 Form IL-1040 Exemption Allowance Chart).  If you are required to file an Illinois tax return, you will file as a nonresident. 

As a Iowa resident, you will have to report the income, but you will be able to get a credit for taxes paid to another state if you have any Illinois tax liability.

[Critter-3]

Yes you will need to file an IL return for the farm.  Iowa should give you a credit on the taxes you pay in IL ... remember to complete the IL non resident return first and then the Iowa resident return even if you will not file them in that order. 

[Carl]

If you are required to file for both states, then complete your resident state return *LAST*. Otherwise, the program will not credit your resident state return for taxes paid to a non-resident state.