To
claim the exemption, you must file Form IL-W-5NR, Employee's
Statement of Nonresidence with your Illinois employer, to certify residence in one of the
covered states. However, this will not affect your 2016 state income tax filings
If you maintained your permanent residence in IA and your only IL income is from wages, then you will not have an IL nonresident
state income tax filing (unless IL withholding were taken out of your pay (see
below)). You will instead include all income (including IL source wages) on
your IA resident state income tax return.
IA and IL have what
is called a state reciprocal agreement. This allows nonresidents to not have
state withholding taxes taken out for wages earned in the state.
Since you will not have an IL state income tax filing,
just check that you selected "no" to " Did you make money in any
other states?" under the Personal Information section in TurboTax (see
screenshots)
You can get rid of a
state without clearing your federal return by just deleting the state from your
list of states under the "State Taxes" tab.
Please note that you
will not have a delete option until you actually start working on the state.
Select that you want to start the state return under the state taxes tab. The
system will start calculating. Then go back into the state tab at the top of the
screen and you should now get a choice for that state to either continue or
delete. You won't be charged for just starting the state return. You would only
be charged (if applicable) when you are getting ready to file.
In order to get the
full refund of your IL state income tax withholdings, you will need to file a
nonresident IL return but report zero "0" income from IL (even though
you do have IL wage income). You need to file your IL return this way because
IA does not allow a credit for tax paid to a reciprocal state on wages,
salaries and commissions. If tax was withheld by a reciprocal state (IL), you
must file directly with the state for a refund of those taxes. You must mail in
this IL nonresident state income tax return and include your state W-2
information. You will want to include an explanatory statement with your IL
return stating your situation (that your IL employer withheld IL taxes from
your wages in error due to a reciprocal agreement with IA).
