Working out of state

[Intrusion]

Hi, I live in Illinois and I'm employed by a company that resides in Wisconsin. They told me they aren't able to withhold state taxes and that I'd need to save 10% of my income to pay them myself. Is this correct and if so how do I actually go about paying? Do I just file like I normally would at the beggining of the year?

Thanks.

[Hal_Al]

Q. They told me they aren't able to withhold state taxes and that I'd need to save 10% of my income to pay them myself. Is this correct?

A. Yes, if you both live and work in IL. . It is not uncommon for an employer to be unwilling to withhold state tax for a state they have no nexus in.

Q. How do I actually go about paying? Do I just file like I normally would at the beggining of the year?

A.  You make quarterly estimated payments to Illinois and file a regular IL resident tax return, after the end of the year.

In your 2021 TurboTax Illinois Program, you will reach a screen that will ask if you want to make estimated payments for 2022.  At this late point, you may just want to wait and pay when you file your IL return.  There will be an underpayment, either way,  since you have already missed the first 3 quarters payment deadlines. 

[SteamTrain]

Well, its first important to note that WI and IL are reciprocal tax states....and as such, an IL resident either physically working a W-2 job in WI  , or even if some is done remotely from home in IL, only has to pay IL taxes on that W-2 income.  (you may already know this)

Problem is, that not all WI companies are registered with IL in a way that allows them to withhold IL taxes for you with each paycheck.  This sounds like what your WI employer is telling you.   (Many WI employers can withhold IL taxes for their workers who cross the border from IL to work for them...but not all can/do)

This being your situation, you are expected to pay your "estimated" IL taxes yourself on a quarterly basis during the year using the IL-1040-ES  payment forms  IF...IF...your Balance Due for IL taxes for at tax time are expected to exceed $1000, if you did not pay those estimated taxes....These payments are "generally" due to be paid by the 15th of April, June, September of 2022, and January of 2023  (But because of weekend dates, two of the dates are extended 18 Apr 2022, and 17 Jan 2023 ).

You should read the IL details at:

Individual Income Tax Estimated Payments - Filing Requirements (illinois.gov)

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There is a link to the IL-1040-ES tax forms on that page....but you may be stuck making a large ES payment for the full tax year as we are now in the last quarter.  Doing so might reduce any penalties or interest for underpayment that might have accrued.

There are some exceptions for having the penalties/interest applied if you wait until tax time to file&pay...but that really depends on the specific details of each person's prior year IL tax situation...how much the IL tax liability was last year (for 2021 taxes)...and what the IL tax liability ends up being this year.  (Tax liability is the IL tax total assessed Before considering any IL withholding or IL estimated tax payments done during the year)