I live in Illinois work in Indiana. I now have to pay county taxes for Indiana. Was told by tax consultant since my place of employment has locations in Illinois, Indiana county taxes should not apply. Is that true? Have an Indiana tax bill says different. What do I need to file to get this corrected for following year?
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sorry, for 2022, there is no reciprocal agreement between Illinois and Indiana. compensation earned for work performed in Indiana by an Illinois resident is taxable by both states. then for Illinois you get a tax credit for some or all of the taxes you paid to Indiana. on the other hand, if the Company is based in Indiana but all your work was done in Illinois locations you would not be subject to Indiana income taxes.
from Indiana department of Revenue
If you were a legal resident of another state (exception: see Full-Year Residents of Kentucky, Michigan, Ohio, Pennsylvania, or Wisconsin below) and had income from Indiana (except certain interest, dividends, or pension income), you must file Form IT-40PNR. See more information on IT-40PNR instruction booklet.
I take "work in Indiana, with work locations in Illinois" to mean that you physically work sometimes in IN and sometimes in IL. If that is the case, you owe IN county tax, as well as IN state tax, on your IN wages for the days you work in IN. Ideally, you ask your employer to withhold only for those days. Otherwise, you have to file an IN county return (an attachment to the IN state return) to claim a refund, or pay any additional tax.
On your IL resident return, you can claim a credit for both the IN state and county taxes you paid.
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