State Income Tax Return

[harnackt]

My husband is currently active duty and I retired June 1st, 2018, so now I'm a military spouse. We are both residents of Illinois, however we got stationed in Virginia 6 years ago. He moved to a military base in England in September 2018 and I currently reside and work in Virginia with our dependent. I paid VA state taxes this past year, but didn't pay anything in IL so I'm not sure how to file my return. Any assistance and advice will be greatly appreciated. Thank you.

[Carl]

" so now I'm a military spouse"

So are you indicating that you were not a military spouse before you retired? The only way that could be true, is if you were active duty military too. So is that assumption correct?

[harnackt]

Yes, I was active duty for 20 years and retired June 2018.

[TomD8]

Illinois does not tax active duty military pay, nor does it tax military retirement pay.   If you are now retired from active duty and have become a resident of VA, your income from a civilian job located in VA is not taxable by IL.

[harnackt]

So do I need to file an IL tax return? I filed in VA as a nonresident because my civilian job withheld VA state taxes and it was rejected. They stated that I need to provide them with my IL tax return in order to get my refund.

[TomD8]

Yes, you need to file an IL tax return.  IL requires that any IL resident who has to file a federal return must also file an IL return.   Your military active duty income (and any retirement income you received as an IL resident) must still be reported to IL,  even though they won't actually be taxed.  Technically you were a resident of IL while you were still on active duty.  If, following your retirement, you still maintained your domicile - your main, permanent home - in IL , and your stay in VA is just temporary, then you are a full-year resident of IL and a non-resident of VA. 

However, if you have now moved your domicile  to VA, or if you have lived in or maintained a place of abode in VA for more than 183 days of the tax year, then for 2018 you are a part-year resident of each of the two states. https://www.tax.virginia.gov/residency-status