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spc92
Returning Member

Live and work in different states

Hello all,

 

I am single with no dependencies and I am resident for tax purposes.

During 2020:

January-July: I was working and living in North Carolina.

August-December: I was living in South Carolina but my job is/was in Illinois. (Due to COVID I was working remotely)

 

Do I have to file taxes for South Carolina? Is my Illinois income taxable in South Carolina?

 

In turbotax, depending on my choices and the input I give it either says SC refund 0$ or SC tax due 800$. In particular on state taxes for NC in "Summary of Taxes Paid to Other States" I add Illinois, but then it says "Enter the following information for income you earned while a South Carolina resident that was taxed by both Illinois and South Carolina." And it asks for "Double-Taxed Income While a Resident of South Carolina" and "Tax Paid to Illinois on Double-Taxed Income". I am not sure if my income from Illinois is double-taxed. What is a double-taxed income? My income comes from Illinois and I pay state income tax in Illinois, so I am not sure if I need to pay taxes in South Carolina as well.

 

Thank you for your help!

3 Replies
Hal_Al
Level 15

Live and work in different states

You employer should not have withheld IL state tax, since you did not physically work there.  You need to file an IL non resident return to get a refund. 

 

You file  part year resident returns for both NC & SC.  Your "IL income" is taxable by SC.  

spc92
Returning Member

Live and work in different states

Thank you for your response!

 

Yes, indeed I will file a non resident for IL and part year resident for NC and SC.

However, I believe my employer in IL have withheld state tax. According to my W2 (for my job in IL) the "state income tax" is >>0.

Given that I have paid taxes to IL I still need to pay taxes for SC? I read online that if your income is taxable to one state (IL) and is also taxable to another state (SC) then I might be eligible for tax credit so that I do not pay the same taxes for the same income in two different states.

 

Thank you!

TomD8
Level 15

Live and work in different states

In your situation you actually have no "double-taxed" income. 

Since you never actually (physically) worked in Illinois, your income from your remote job is not taxable by Illinois.  If you had physically worked in Illinois while being a resident of SC, your income would have been taxable by both states.  That's because SC can tax ALL the income of SC residents, regardless of its source.  And Illinois can tax non-residents on income from worked actually performed in Illinois.  If that were your situation, you'd pay taxes to both states, but you'd be able to take a credit on your SC return for the taxes paid to IL.

 

As @Hal_Al explained, since your employer should not have withheld IL taxes, you must submit a non-resident IL return, showing zero IL income, in order to get those taxes refunded.  And the income from that job is 100% taxable by SC, your resident state at the time.

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

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