I live in Indiana and work in Illinois. Do I need to allocate my federal income to Illinois? Also, my Indiana state tax is saying I owe a lot of money for some reason.

[KeshaH]

You will need to file a nonresident Illinois return and allocate the wages you earned to Illinois.

You would then qualify for a credit on your Indiana return for taxes paid to Illinois. If your employer didn't take taxes out of your paycheck for Indiana, that would explain the balance due that you see right now. Once you complete the Illinois return and generate the credit to Indiana that should change.

[TomD8]

Be sure you complete your non-resident Illinois return before you do your home state Indiana return, so that the program can properly calculate and apply the "other state credit" to your Indiana return.