Daughter is a grad student in IL living in an apartment but remains Iowa resident

[Mel1113]

Hello,

my daughter is a grad student in IL, is renting an apartment, working as a server, but is only there for the sole purpose of being a student, therefore is still an Iowa resident. She is also a dependent on my taxes. It appears that TurboTax is saying she changed her residency because she worked there in 2024 and lived there. I don’t think I can select the worked but did not live in IL as an option? Just trying to figure out what I am to select on the form and if we need to file a nonresident form for IL. Also, do I include the IL wages on the Iowa state return? Any guidance is appreciated.

Thank you.

[TomD8]

Illinois and Iowa have tax reciprocity for W-2 earnings.  That means that Iowa residents such as your daughter are not subject to Illinois income tax on those earnings.

Your daughter does not need to file an Illinois tax return unless Illinois taxes were mistakenly withheld from her pay.  If that happened, she should submit a non-resident Illinois tax return, on which she claims zero Illinois income, in order to receive a full refund.

Her income is of course fully taxable by her home state of Iowa, regardless of where it was earned.

Your daughter should submit Illinois Form W-5-NR to any Illinois employer in order to prevent Illinois taxes from being withheld.  Here's a link to that form:

https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/withholding/documents/currentyear/il-w-5-n...