I lived in Illinois and received a 1099-NEC for work done for a Massachusetts company until November. Then I took a full time position and moved to MA and received a W2 for that. Turbo Tax is telling me I owe significant tax to IL. Why?

[AnnetteB6]

Illinois is taxing the income that you earned while you were a resident of Illinois.  If you lived in Illinois and performed your independent contractor work in Illinois, even though you were being paid by a company outside of Illinois, that income is still considered to be Illinois income.

Your income will be allocated between Illinois and Massachusetts based on the months that you were a resident of each state.  

[Malaferd]

In your reply, you say that "Your income will be allocated between Illinois and Massachusetts based on the months that you were a resident of each state. " 

How does Turbo Tax determine the months you were a resident of each state?  I have a 1099-NEC that was earned entirely while working from IL for a MA firm.  

I have a W2 entirely earned while living in MA working for the same MA firm.

How do I tell TT which goes where?
I want to avoid paying full state taxes on the same income to both MA and IL for the 1099-NEC and I don't want to pay any IL state taxes for the W2.

[JohnB5677]

You are going to prepare tax returns for both Massachusetts and Illinois.  You will pay taxes in Massachusetts for all of the income you earned in Massachusetts, regardless if it was the 1099-NEC or W-2, and regardless of where you lived.

All of the income you earned in MA while living in IL will be included on the IL tax return (this sounds like the 1099-NEC that you got); however, you will get credit for the tax paid to MA on the IL tax return.

[Malaferd]

You say: "All of the income you earned in MA while living in IL will be included on the IL tax return (this sounds like the 1099-NEC that you got); however, you will get credit for the tax paid to MA on the IL tax return."

These are the two parts I'm struggling with:

1)  How do I tell Turbo Tax for Illinois that the W2 is for MA only?

2)  How do I tell Turbo Tax for Illinois to give me "credit for the tax paid to MA"?

I feel that I must have something not set up correctly because Turbo Tax is telling me that I owe half as much to the two states as what I owe the Feds--and that's including all the self-employment taxes I owe the Feds for the 1099-NEC

[Vanessa A]

1) You don't need to tell TurboTax that the income was earned in IL.  The credit isn't based off of your earnings, it is based off of your taxes paid to another state.

2) You will fill out the MA return first, then TurboTax will transfer that information to your IL return.

Your federal amount due includes Self-Employment tax which is 15.3% of whatever your net earnings. This is in addition to your regular income tax.  The state does not charge a special tax for Self-Employment income. 

[Malaferd]

OK.  So maybe that's the issue.  I did IL first.

When I go to the "Credit for taxes paid to another state" on the Illinois TT it shows as $0 even though I "revisited" that category and entered the income and taxes paid for MA.

I don't see any way of deleting just the Illinois taxes and re-adding them after the MA.  Is there a way?

Or do I have to delete the whole tax form and restart at the federal level?

[DianeW777]

No, you should not delete the entire return.  You can delete the Illinois (IL) return. If you have not yet paid for your state return you can delete it by using the link below.

• How do I delete a state return in TurboTax Online?