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jbard002
New Member

I live in Wisconsin and work in Illinois and pay Illinois State Income Taxes. How do I handle this on my state returns? Do I only file a Illinois return?

Or do I have to file a Wisconsin return as well?  If I do have to file a Wisconsin return how do I handle my income since I don't believe state income tax should not be taken from both states?
4 Replies
TomD8
Level 15

I live in Wisconsin and work in Illinois and pay Illinois State Income Taxes. How do I handle this on my state returns? Do I only file a Illinois return?

You always have to file a tax return in your home state.  So you definitely have to file a Wisconsin return.  Your income is 100% taxable by Wisconsin.

Wisconsin and Illinois have tax reciprocity.  That means that if your Illinois income is solely W-2 wages, ordinarily you would not have to file an Illinois return at all. Your income would be taxable only by Wisconsin, and you would be only required to file in Wisconsin..  However, if your employer is mistakenly withholding Illinois taxes, you'd need to file a non-resident Illinois return (showing zero Illinois income) in order to get those taxes refunded.  So if that was the case in 2016, you'd be filing a non-resident Illinois return (to get the refund) AND your regular Wisconsin tax return.

If your employer is withholding Illinois taxes, you should file Illinois Form IL-W-5-NR with him, declaring that you are not an Illinois resident.  Here's a link to that form:  http://www.revenue.state.il.us/taxforms/Withholding/IL-W-5-NR.pdf

Filing that form will cause your employer to stop withholding Illinois taxes.

Hope this makes it all clear. 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
DavidSB
Level 1

I live in Wisconsin and work in Illinois and pay Illinois State Income Taxes. How do I handle this on my state returns? Do I only file a Illinois return?

Does this answer also apply for working from home?

I'm moving from Illinois to Wisconsin and my employer is OK with me working from home full time, but they are reluctant to set up a whole new tax relationship with Wisconsin.  With the Illinois/Wisconsin reciprocity is it possible for my employer to just continue paying Illinois income taxes and I'll work it out on my tax documents, or do I need to fill out some sort of certificate of non-residency with one of the states?

SteamTrain
Level 15

I live in Wisconsin and work in Illinois and pay Illinois State Income Taxes. How do I handle this on my state returns? Do I only file a Illinois return?

@DavidSB 

 

For a W-2 employee.........as soon as you become a WI resident....You fill out an IL-W-5-NR and submit to the IL employer.  Doing so allows the employer to not withhold any IL taxes at all from that point on.  You don't give that to the employer until you actually move. (Payroll department and/or HR if they have one) 

 

https://www2.illinois.gov/rev/forms/withholding/Documents/currentyear/il-w-5-nr.pdf

_______________________

Then, you find the procedure for sending in quarterly estimated tax payments directly to the WI tax department, and send them quarterly payments instead of the employer withholding normally done .  (in order for the employer to withhold WI taxes, they have to register in some way with WI....and not all employers are able, or willing to do so..normally small IL employers, with few WI resident employees, won't want to bother ).

 

FAQs and link to the Instructions, and to the 2019 Forms 1-ES are here:

https://www.revenue.wi.gov/Pages/faqs/pcs-estpay.aspx

___________________________________

 

IF you move in 2019, then you will have to file a-part-year IL and a part-year WI tax returns, and since it is Dec, may not need to file/pay WI estimates for 2019 for the one partial month remaining....probably too small to bother.

 

But if you don't move until sometime in 2020, then you will need to pay the WI-estimates according to the quarter in which you move  (Check the dates in the WI FAQ above). You do that directly with WI. You can't have TurboTax arrange those payments.  Just make sure you send WI the 2020 estimated forms at that time, not 2019 forms.   

 

For the IL and WI part-year tax returns, IL will tax you only on ALL your income for the portion of the year you were an IL resident, and WI will tax you the remaining.  (keep monthly records of all income, interest, dividends, cap gains...etc.  You'll need them in the year you actually move to WI).  In subsequent years, then it's only the WI tax return that needs to be filed (as long as you don't have property in IL that you rent out, or run some other personal non-W2 business in IL)

 

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
DavidSB
Level 1

I live in Wisconsin and work in Illinois and pay Illinois State Income Taxes. How do I handle this on my state returns? Do I only file a Illinois return?

That is extremely helpful.  I am a W-2 employee and we'll make the move in 2020, so your advice is spot on and so much more than I thought I'd get in an answer, thank you so much!

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