It depends. Since it is your resident state, Illinois can and does tax all of your income. You can't change that. However, Illinois will allow you to claim a credit on the Illinois return for taxes you pay to NY, RI and CA. For KY, if KY tax was withheld, you would file a KY Nonresident Reciprocal Return to have the Kentucky tax refunded to you. If no KY tax is withheld, then you will not need to file a KY return. (Illinois has a reciprocal agreement with KY that states you pay tax in IL and not KY on that income).
You will first want to prepare nonresident returns for NY, RI, and CA Do a little math to ensure the correct credit calculates on the IL return: write down the amount of income that is reported to each, and the tax withheld for each state. Then, on each state's return, subtract any refund you receive from the amount withheld, or add to it any additional tax you must pay. This represents the tax liability in each.
On the Illinois resident return, you will come to a section regarding taxes paid to another state. If the NY, RI, and CA taxes have not transferred over automatically, then you enter the amounts you wrote down in the step above for each state: the taxable income being reported to each, and the tax liability for each. Illinois will apply a credit for either the amount that Illinois taxes or the amount of tax liability to the state in question, whichever amount is lower. (You can also use these same screens to claim any local taxes paid to KY, reported in box 19 of the KY W2).
While Illinois does tax all of the income, this technique will considerably reduce the Illinois liability on the income earned elsewhere.
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