topic Moved from IL to AL in 2020; how can I talk to a professional regarding Alabama Income Tax? in State tax filing

Moved from IL to AL in 2020; how can I talk to a professional regarding Alabama Income Tax?

capitankak — Thu, 18 Mar 2021 17:31:28 GMT

Hello - My wife and I file jointly, we have 2 kids. Typically our situation seems straightfoward, however 2020 is bringing up a whole bunch of questions. On July 20 2020 we sold our home of 7 years and moved from Illinois to Alabama (rented home in AL, did not purchase a new one). So, we purchased the extra state through desktop TurboTax Deluxe) and are planning as filing as Part Year Residents in both states. My wife is a teacher, has W2 in Illinois and another W2 in Alabama. I received 1 W2 for the year, working for the same company throughout.

Although I changed my address with my employer in late July, I paid IL state income tax on my paychecks through all of 2020. Is this okay or something I need to rectify with my employer?
I've had the same employer the whole year (1 W2 for 2020) and was going to split my income as 55% earned in IL and 45% in AL (based on number of days lived in the year in each state). Is this the correct thing to do? Wife would report W2 from the IL school district as earned in IL and the same for AL.
For Alabama - do we need to file both Form 40 and Form 40NR? If so, it looks like TurboTax does not support this so how would we file both forms?
Typically we receive $500-700 each year from IL. This year the result is much higher after filling out all forms. Also, we owe an extremely high amount to AL. I'm wondering if this is common and if someone is able to review this for us.

It looks like for TurboTax Live a customer can order a professional to overlook their returns - is this same type of service available for TurboTax Deluxe on my laptop? Thanks in advance for ANY help.

Re: Moved from IL to AL in 2020; how can I talk to a professional regarding Alabama Income Tax?

ErnieS0 — Thu, 18 Mar 2021 20:52:23 GMT

Your assumptions are correct.

File a part-year Illinois and part-year Alabama income tax return and only report the income earned while you were residents of each state. For AL you only have to file Form AL-40 because you did not earn any AL income while living in IL.

Your income allocations sounds fine. TurboTax will automatically transfer your wife’s W-2s to the correct state based on the state code on the W-2s.

Change your withholding. Your employer should not be withholding IL income tax. File Form A-4.

You will get a larger than normal IL refund and owe to AL because you are reporting half a year’s income to AL where no AL tax was withheld. On the flip slip, you are subtracting half a year’s income from IL but the you have a full year’s IL withholding. The withholding has already been sent to IL so it can’t be repurposed to AL.

Consider mailing in your IL return with explanation that your employer did not withhold state tax correctly. Include a copy of your AL return showing that you reported your total income correctly. You don’t have to, but you may get a tax notice from IL later and you’d have to do the same thing. Filing by mail will delay your IL refund so that’s also something to consider.

If you have TurboTax Live, you can get an Expert Review.

Re: Moved from IL to AL in 2020; how can I talk to a professional regarding Alabama Income Tax?

capitankak — Tue, 23 Mar 2021 22:25:33 GMT

Ernie - I just wanted to say a big THANK YOU for taking your time to address my questions and provide thorough explanations. It is truly appreciated!!!!!! 😀