Live in Wisconsin & Work in Illinois

[IFoxHoleI]

I live in Wisconsin and worked in Illinois during 2024. I paid income tax to Wisconsin. However, I am filing my state returns - Illinois (NR) and Wisconsin - and noticing that I owe income tax to Illinois. I know that Illinois and Wisconsin are reciprocal states and I should only be paying income tax to the state I live in (WI). Why does TT indicate I owe income tax to IL? What am I doing wrong? Thank you in advance for your time and attention to this request.

[MindyB]

You don't need to file at all in Illinois. ‌The only reason you would need to file in Illinois when your only income is reciprocal W-2 wages, is if your employer withheld tax to that state and you needed a refund.

You will file just a Wisconsin return and report your wages as if you had earned them there.

If you accidentally bought 2 states, here is how to get a refund: How do I request a refund for my TurboTax product?

Here is more information on reciprocal states: What is a state reciprocal agreement?

[IFoxHoleI]

Hello Mindy, 

Thank you for the prompt response!

TT requires me to enter the W-2 wages from my Illinois employer. There is a section that asks "How much of the [earned wages] did you earn while working in Illinois?" Once I enter that information, which is all my W-2 wages for 2024, TT indicates that I owe the state of Illinois (in addition to an underpayment penalty).

This is where my confusion comes in. Is this a TT issue or am I entering something incorrectly along the way? If I am entering something incorrect, where could this be happening during the input process?

[MayaD]

As MindyB mentioned, if you didn't have any IL taxes withheld on your W-2, you don't need to file IL return.

1. Revisit your Personal Info /MY Info screen and scroll down to Other State Income. 
2. Don't indicate you made money in another state. 

[IFoxHoleI]

Hello Maya,

Thank you for the additional input.

If I change my answer in the Other State Income section from 'Yes, I made money in states other than WI' to 'No, I didn't make money in any other states', isn't that misleading or is it appropriate for reciprocal state situations?

[SteamTrain]

@IFoxHoleI 

That is appropriate for reciprocal states.

All your W-2 income from the IL employer, is treated As-IF you only worked in WI.

_____________

The only time you have to mess with IL non-resident tax forms, in your situation, is IF the company accidentally withheld IL taxes.

[IFoxHoleI]

Thank you, SteamTrain!

Is there a tax expert who can confirm/validate this course of action before I proceed?

[MaryK4]

SteamTrain is 100% correct- if you are in a reciprocal state situation, you can indicate that you did not make money in any other state.  The question is used by TurboTax to determine which state tax returns you have to file!  @IFoxHoleI 

[IFoxHoleI]

Perfect! Thank you to everyone - @MindyB, @MayaD, @SteamTrain, @MaryK4 - for your time, effort, and expertise. Very much appreciated 😁