IL part-year resident - what should I used for IL based income taxed by NY?

[tubotaxdz]

I'm pretty new to filing taxes, so apologies in advance for my lack of knowledge around this process.

I work for an IL based company and originally lived in IL from the beginning of the year until 7/1/21, where I moved to NYC. I continued working for the IL company after moving, and had both IL, NY, and NYC withholdings. The IL withholdings show up as normal in box 16 and 17 of my W-2, and I received a second W-2 reflecting the NY and NYC withholdings (boxes 16-17 for state, and 18-19 for NYC/locality taxes).

I'm in the process of completing my state return for IL and I've gotten to the step "Illinois base income taxed by New York" where it asks me to enter in the income and tax paid to another state. There are two fields - one labeled "Income taxed by New York" and "Tax paid to New York", as well as a check box for "City, County, or Locality taxes?". I'm confused about how I should enter in my NY taxes here since both the state vs local wage amounts in my NY W-2 differ (box 16 matches my full IL income, whereas box 18 seems to be a little over half of the amount reported in box 16). If I enter in the amounts as two separate entries, the table adds both income values and creates an incorrect total income. Should I create a single entry and fill out the income field with my full IL wages and the taxes paid field with the sum of the state and local taxes together?

Thanks in advance for any clarity around this, I have been googling and reading through the schedule CR instructions for a few days and am still stumped!

[MaryK4]

If you are filing a Part-Year return for Illinois and New York and did not have any nonresident state source income for either state, you report the income you earned while resident of each state only.  You do not have to do the credit for income paid to another state ( income taxed by both states) UNLESS you had nonresident New York income while you lived in Illinois.  

[tubotaxdz]

Hi, thanks for the response. I continued working at my IL company after moving to NYC, so I believe I did receive non-resident state source income for IL (and was taxed by NY, NYC and IL for it). Since I was double taxed in both states for the same income source, I should be able to receive credit for paying taxes to NY, right? I'm just unsure how I should input these amounts in my IL return since I was taxed different amounts for the NY state and local city taxes.

[MaryK4]

If you worked in New York, it would not be Illinois income just because the company is in Illinois.  On your W2, your Box 15-16-17 for Illinois should have the wages for the part of the year you lived in Illinois.  

@tubotaxdz

[tubotaxdz]

I am working remotely in NYC, but my income source is still coming from IL, which is why I continued having IL withholdings on top of NY and NYC withholdings after moving. Additionally, box 16 on both my IL and NY W-2s are the exact same amount, so I believe that both states taxed me on the same income amount, and I can get credit for the taxes I paid in NY. The main confusion is around the fact that the local wages and taxes (box 18-19) differ from boxes 16-17 on my NY W-2, so I'm unsure if I should be entering these as separate entries or combining them into a single entry.

[tubotaxdz]

Hi @MaryK4, after some more digging around, I think I understand what I'm supposed to do. Since I wasn't paying NY taxes while living in IL, I would file my part-year resident return for IL as normal. However, since I was double taxed after moving to NY, I would file a part-year resident return for NY and take the other state tax credit for my NY state return (my resident state) and not IL. 

Can you please verify if my understanding is correct? Thanks for all your help with this.

[MaryK4 · Accepted solution]

Yes, you will enter the income that you are reporting as taxable to both states on your New York tax return.  You will want to complete your Illinois tax return first (so that you will have the amount of tax paid to Illinois).

@tubotaxdz