Solved
I worked in Illinois and retired to Arizona at the end of 2016. I was granted RSUs by my Illinois employer over the years and a portion of the granted shares vested in 2017 (this will also occur in 2018 and 2019 since any grant is vested in thirds). My employer reported this as W-2 income and withheld taxes (I understand how that works). The State tax withholding was assigned to Illinois (not Arizona). I was not a resident of Illinois at any time in 2017. Do I simply file a non-resident Illinois Tax return and get the refund of the withheld amount or does Illinois still have a claim to the taxes since the grant occurred while residing in Illinois even though I was no longer a resident when the subsequent taxable vesting event occurred (I have heard elsewhere that some states do this)? Note that there is no entry in Box 14 of the W-2 indicating RSU.
Most states take the position that "compensation" income created by vesting or exercise of options is income in the state you lived in when you received the grant. It sure sounds like Illinois has taken that position. This will happen in 2018 and 2019 also.
Tom Young
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