Live in MI, work in IL, employer paid MI taxes, zero to IL

[soccerdon1981]

Job # 1: Lived & worked in Illinois through March 2016. Quit this job in March 2016. Company deducted & paid state taxes to Illinois. No problem here.

Job # 2: Moved to Michigan in April 2016, but got a job in Illinois in July 2016 (I traveled back and forth between home & work). My company deducted and paid state taxes to MICHIGAN and absolutely zero state taxes were deducted for Illinois.

Was this correct? I'm reading that they should be paying Illinois taxes via this tip in the State Tax Filing section:

To figure out how much income you earned while living or working in Illinois, you'll have to include income from up to three different situations:

 - Income earned in Illinois while you were an Illinois resident
 - Income earned outside of Illinois while you were an Illinois resident
 - Income earned in Illinois while you lived outside of Illinois

If only one of the above applies to you, then the income you earned during that time period is your total income earned while living or working in Illinois. If two or three of the situations apply to you, you'll have to figure out how much income you earned during each situation and add the amounts together.

There are two exceptions to the rules above. If you worked in Illinois while you were a resident of Iowa, Kentucky, Michigan, or Wisconsin, you shouldn't include your Illinois wages. Also, you shouldn't include your Illinois wages if you were living in Illinois only to accompany your military service member spouse who was stationed there.

Example 2: Rita lived and worked in Illinois at the start of the year. She moved to Ohio in May, but she continued working at the same job in Illinois for the rest of the year. She earned $20,000 while living and working in Illinois and $30,000 while living in Ohio and working in Illinois. This means Rita earned $50,000 while living or working in Illinois.


I would really appreciate some guidance. I am like RITA in this example with one exception - I didn't keep my original Illinois job, I got a *new* Illinois job after moving to Michigan.

Totally lost here ... please help. :(

[DS30 · Accepted solution]

Yes this is correct due to the fact that IL and MI have a reciprocal agreement related to wages. This allows nonresidents to not have state withholding taxes taken out for wages earned in a reciprocal state.

So even though you lived in MI and worked in IL after April 2016, because of this state reciprocal agreement, you will only need to file a part-year MI return to report your IL-source wages earned while a part-year resident of MI. No IL nonresident state income tax return is required. (That is why your employer only took out MI withholdings after you moved to MI.)

So you will have to file both a part-year IL and a part-year MI resident state income tax return. You will divide your wages based on the time in each state and report these amounts separately on your part-year resident state income tax returns of each state.

Check below for more information about filing a part-year state tax return (Please select "see entire answer" to see full answer)

https://ttlc.intuit.com/replies/3302008

[brian-a-derstine]

the turbo tax interface for this situation is confusing.  it asks how much i earned that i should allocate to Michigan.  Then how much i earned while i was a resident of michigan.  it sounds like because the state i moved to was illinois, and i maintained my michigan job, i should report 100% to Michigan regardless of residency status.  This is not intuitive at all and results in an incorrect tax calculation for both michigan and illinois if the residency question is answered as anything less than 100% to Michigan.

[brian-a-derstine]

it is only not intuitive on the Michigan state return.  The Illinois state return includes the clarifying information in the "Learn More" link as stated in the question.  This same Learn More link/information (with the Rita example) should be included on the Michigan state return on the screen that asks how much to allocate while a resident of Michigan.  Currently there is no "Learn More" link on that screen (i was looking for one!).