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laurenhart44
New Member

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

 
9 Replies
SweetieJean
Level 15

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

If you are unlucky enough to work across state lines in a state with no reciprocal agreement with your resident state, (for instance, Illinois and Indiana), then you will need to file income tax returns for both states. However, you should also be able to claim a credit on your resident state income tax return for the state income tax that you paid for the nonresident state. 

File an IN nonresident return, and then an IL resident one.

pwagner1120
New Member

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

I have done that and turbo tax says I owe money on the entire amount for both states
jbwestern
New Member

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

I am having issues as well.  It says owe for indiana and illinois.  I can't figure out what i am doing wrong.   Maybe not putting credit for the other state taxes paid? Says to use long form to do that but couldn't find an option for a long form on the mobile app..
jbwestern
New Member

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

Says owe very large amounts like 600 and then 700 plus on both.. can't be correct... this year is no different than the last 3.
chicagoblues11
New Member

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

Do you get an INDIANA credit for ALL the taxes you paid to Illinois?  We always seem to give more to Illinois, but Indiana will only give us a portion of those IL taxes when calculating the credit due on our IN taxes
chicagoblues11
New Member

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

It is possible that you did not take out enough IL taxes and the way IN calculates the credit (it is NOT for the entire amount of taxes you paid to IL), you can still owe IN money.  This is especially true if you are now getting hit by county taxes.  

We always seem to pay  more $ to IL for taxes.  IN  will calculate a credit for taxes paid to other states (IL) that is about a $1k less than what we actually paid, and THEN we still will owe IN about $1K. So we now pay about an extra $2K between paying IL more and IN giving credit for less than IL taxes paid.

It is nuts.
Ladyb2
New Member

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

Do I pay any taxes to Indiana if my gross income is $16,000?

tbeauty1969
New Member

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

I am paying IN where I work only, over 4000.00 a year in taxes I claim 0 plus have an additional 5.00 a paycheck withheld and still at the end of the year have to pay at the minimum 1000.00 for driving 15 minutes to IN just to work, then every year owe IL between 100 to 200 to them, this is robbery at its finest!!!!   

GeorgeM777
Employee Tax Expert

I live in Illinois but work in Indiana? Indiana taxes are being taken out of my check. What do i do?

Because Illinois, the state where you live, does not have a reciprocal agreement with Indiana, the State where you work, your Indiana employer is obligated to withhold wages from your paycheck  Additionally,  you must pay taxes, as a non-resident, to Indiana because that State is where you perform services for which you are paid.

 

However, because it appears you are a non-resident of Indiana, you will get a credit on your Illinois return for having paid taxes to Indiana.  In order to ensure that you get the full amount of credit you are entitled, make sure you complete your Indiana non-resident return before you complete your Illinois return.  When it is time to complete your Illinois return, you will be asked whether you paid taxes to any other State.  Answer this question with a "yes" and the follow the steps to enter the amount of taxes you paid to Indiana.  This type of credit will help to reduce the taxes you owe to Illinois.  

 

Even though you will get some credit for paying taxes to Indiana. the credit will not be large enough to eliminate your tax obligation to Illinois.  Indiana's tax rate is 3.23% whereas the tax rate for Illinois is higher, at a flat rate of 4.95%.  

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