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sari-head4
New Member

Filing state tax return on unemployment payed by one state while living in a different state.

I was living and working in Arizona. I lost my job and moved to Illinois. I filed for and started receiving unemployment from Arizona. I have not worked since moving to Illinois, unemployment is my only income. Do I have to file a state tax return with Illinois since I received the unemployment while living there, even though it's payed through Arizona? And on my Arizona state tax return do I include the unemployment as income also since it was payed by Arizona?
65 Replies
DianeW
Expert Alumni

Filing state tax return on unemployment payed by one state while living in a different state.

It depends on the amount of unemployment income you received.  For Arizona taxpayers; if you are Single, Married Filing Separately or Head of Household and your Arizona Adjusted Gross Income (AAGI) is at least $5,500 or your Gross Income (GI) is at least $15,000 you must file.  If you are Married Filing Jointly and your AAGI is at least $11,000 or your GI is at least $15,000 you must file. 

If your unemployment meets the filing requirements above, you will file a non-resident Arizona tax return Form 140NR.

For Illinois taxpayers:  Who must file an Illinois tax return?

If you were an Illinois resident, you must file Form IL-1040 if

  • you were required to file a federal income tax return, or 
  • you were not required to file a federal income tax return, but your Illinois base income from Line 9 is greater than your Illinois exemption allowance. 
    • For tax years beginning January 1, 2016, it is $2175 per exemption. If someone else can claim you as a dependent and your Illinois base income is $2175 or less, your exemption allowance is $2175. If income is greater than $2175, your exemption allowance is 0.
Resident State:  All income worldwide is required to be reported on your resident state return.  Any money that is also taxed in a nonresident state allows you to use "credit for taxes paid to another state" when you complete your resident state return.  Your resident state does not want you to pay tax twice on the same income.  The credit will be the amount of tax charged by the nonresident state or the tax that would have been charged by the resident state, whichever is less. 

File the AZ return first, if applicable, then file the IL return, if applicable, and use the credit for only the unemployment income.

    https://ttlc.intuit.com/replies/3302052

    (Edited:  04.06.2017 | 5:06a PST)

    sari-head4
    New Member

    Filing state tax return on unemployment payed by one state while living in a different state.

    So I don't have to file a state return with Illinois, even though I was living in Illinois already while receiving the unemployment from Arizona.
    DianeW
    Expert Alumni

    Filing state tax return on unemployment payed by one state while living in a different state.

    @sari.head4 The answer has been updated to include the IL filing requirements as well.
    sari-head4
    New Member

    Filing state tax return on unemployment payed by one state while living in a different state.

    So am I understanding this right, I have to file a non resident Arizona for the unemployment I received and then a part year Arizona for the wages earned while living there and a part year Illinois for the Arizona unemployment I received while a resident.
    DianeW
    Expert Alumni

    Filing state tax return on unemployment payed by one state while living in a different state.

    @sari.head4 That's correct.  It's the way it has to be done and an unusual situation.
    sari-head4
    New Member

    Filing state tax return on unemployment payed by one state while living in a different state.

    Do I file them in that order? I know they have to be filed in a certain order but want to make sure that's correct.
    DianeW
    Expert Alumni

    Filing state tax return on unemployment payed by one state while living in a different state.

    Nonresident first, then part year resident returns. I would do IL last (where you live now).
    sari-head4
    New Member

    Filing state tax return on unemployment payed by one state while living in a different state.

    Ok great, thank you so much for all your help!
    DianeW
    Expert Alumni

    Filing state tax return on unemployment payed by one state while living in a different state.

    You bet, you're welcome!
    siblaine
    New Member

    Filing state tax return on unemployment payed by one state while living in a different state.

    But why is the unemployment income earned in another state (in this case New Jersey) being considered income in the state where I live (New York)?  Isn't that double dipping? I am being taxed on that amount twice, once in each state.

    AmyC
    Expert Alumni

    Filing state tax return on unemployment payed by one state while living in a different state.

    In 2015, the Supreme Court decided that people should not be taxed twice. Therefore, you get a credit from your resident state. Here is how it works.

    1. First, prepare your non-resident  return. This creates your tax liability for the non-resident state.
    2. THEN prepare your resident state return and it will generate a credit for your income already being taxed in the non-resident state.
    3. The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state.

    It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.

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    s3
    New Member

    Filing state tax return on unemployment payed by one state while living in a different state.

    Hi,

    Similar question - but still a bit confused.

    Was in WI working, moved to MN to work and moved back to WI (all within 2019) and received unemployment benefits from MN after moving back to WI (so those should be taxed by MN, right?).

    Do I need to file a nonresident form or can i just do a part year MN and part year WI and file WI after MN? If the latter, I think I did it correctly, but the starting date on the part-year MN form keeps auto-filling to 1/1/19

    MaryK1101
    Expert Alumni

    Filing state tax return on unemployment payed by one state while living in a different state.

    An important question- Did you change domicile or did you go to Minnesota to work with no intention of staying there? 

     

    See Domicile (Residency) for Individuals and Legal Residence/Domicile

     

    @s3

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    davidnv
    New Member

    Filing state tax return on unemployment payed by one state while living in a different state.

    Hi!  I am moving from California to Nevada and collecting unemployment from California.  Nevada has no state income tax...so how does that work?  When you mentioned a credit that makes sense when both states charge state income tax but in this case I would be moving from a state that has income tax to one that does not.  Thank you!

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