How should I file? Earned all income in IL, lived in a different state since February 2020 due to COVID

[moosejaw50]

I worked and lived in IL for only 2 months in 2020. I own property in another state and moved to work from there remotely due to COVID. Should I be filing a single state return for IL only (since all income was earned from the IL office) or file two part-year resident state forms for each state? I earned no income in the state where I actually resided for more than 80% of the year.

[TomD8]

We need a little more info to answer your questions.

What was the state you moved to in 2020?

Was your move to the new state a permanent move, or did you maintain your main, permanent home in Illinois and intend the "move" to be temporary followed by your return back to Illinois? 

[moosejaw50]

Moved back to AR. Own property in AR so staying there. It may become permanent remote and residence in AR post-pandemic. I had an apt in IL for the first couple of months in 2020

[KathrynG3]

It depends if you intend to stay in the new state, @TomD8 is correct. Temporary residences would not necessarily subject you to filing a part-year resident tax return.

In general, it would appear you need to file a part-year return for Illinois only if no income was earned in the other state. However, some states may require taxing income earned while living in their state even if they allow a credit for what was paid to Illinois.

I recommend entering both states in TurboTax, with the state you were living in on December 31, 2020 entered last. If your new resident state does not require any tax, be sure to delete that state before paying for the program.

See: How do I file if I moved to a different state last year?

How do I contact my state Department of Revenue?

[moosejaw50]

Thx Kathryn. Some more detail:

- I own a residence in AR, for which I pay mortgage interest + property taxes

- My employer is based in IL (and IL state taxes were deducted on my W2 for the full year 2020)

- No income was made for an employer/business located in AR

- I lived in IL only temporarily (Jan+Feb 2020), and back in AR for the rest of the year

My deliberation is:

1. Do I file one part-year return for IL and claim all income on that return? My concern here is I would not be able to deduct mortgage/property related deductions (maybe just standard)
2. File two part time returns for each state, but not sure how this will work since my employer is in IL and no AR taxes were collected on my W2

Also, not sure how to start a state return in the deluxe TurboTax version without outright paying for it first. I don't mind doing it but only if I must

[TomD8 · Accepted solution]

AR considers you a resident for tax purposes if you spend more than 6 months of the tax year in AR.  So you must file as a resident of AR, and ALL your income for 2020 is taxable by AR, including your earnings from IL.

Section 14, https://codes.findlaw.com/ar/title-26-taxation/ar-code-sect-26-51-102.html

In the My Info section of TT, enter AR as your State of Residence, and indicate that you had other state income from IL.   You must file a non-resident IL tax return (in addition to your resident AR return) if your IL earnings exceeded the IL personal exemption amount of $2,325.

In TurboTax, be sure to complete your non-resident IL return first, before your do your AR return.  AR will credit you for the tax paid to IL on the portion of your income taxed by both states.