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Multi-state tax credit question

I had already e-filed our Federal and Indiana state taxes and was reviewing my Illinois state taxes which must be submitted via snail-mail.  I realized that my Illinois income reflected 100% of my earned income whereas my Indiana portion of my income only reflected the amount earned after I moved to Indiana last summer. (I work remotely but my office is in Illinois). As a part year resident - shouldn't I be getting a credit from Illinois for the income that was taxed by Indiana?  I hesitate only because the Illinois form states "Did you pay income taxes to other states on income you earned while you were a resident of Illinois?" Well, I appear to have paid income taxes to other states on income I earned after moving out of Illinois, but Illinois also appears to have taxed that same income.

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1 Best answer

Accepted Solutions
DanielV01
Expert Alumni

Multi-state tax credit question

You need to allocate your Illinois income.  It looks like they continued to withhold Illinois tax on your income you earned after moving to Indiana and working remotely from Indiana.  Illinois does not consider remote work performed from outside of the state to be taxable in Illinois.  Rather than claiming a credit, you will need to determine how much of the income is actually Indiana income and deduct that amount from what is being reported to Illinois.  You may wish to send in an extension to Illinois, but since reducing your income should result in additional refund instead of tax due, you shouldn't truly need an extension.  

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1 Reply
DanielV01
Expert Alumni

Multi-state tax credit question

You need to allocate your Illinois income.  It looks like they continued to withhold Illinois tax on your income you earned after moving to Indiana and working remotely from Indiana.  Illinois does not consider remote work performed from outside of the state to be taxable in Illinois.  Rather than claiming a credit, you will need to determine how much of the income is actually Indiana income and deduct that amount from what is being reported to Illinois.  You may wish to send in an extension to Illinois, but since reducing your income should result in additional refund instead of tax due, you shouldn't truly need an extension.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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