You do not need to file an Illinois tax return, unless you lived in Illinois when you received the retirement benefit payments. You said you've lived in Georgia for the last 25 years, so the answer would be no. As for state tax withholding, Illinois state tax should not have been withheld. You may not need to have Georgia tax withheld either. Georgia allows a retiree who is 65 year or older to exclude from state income taxes up to $65,000 in pension or investment income a year if single, $130,00 a year if married. Younger retirees -- ages 62 to 64 are exempt from state income tax on as much as $35,000 of most types of retirement income, and $4,000 in wages.
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