Resident if MA but work income from IL

[Scotch]

I am a Ma resident but will be starting a hybrid job that is in IL where I am traveling. I work from MA most days virtually. I expect around 45 days in IL for the year. My workplace is withholding MA taxes. Do I still need to file IL non resident taxes? How much IL tax will I have to pay if I’m only there 45 days? Does buying a vacation home in IL change anything?

[AmyC]

MA

MA will give you a credit for the tax you paid to IL. The credit will be the lower of the state tax liabilities on the same gross income. You may owe your resident state,  if they have a higher tax rate along with differences in how the taxable income is calculated.

IL

IL has a 30 day rule so you will need to file an IL return and pay for that income. IL is a flat tax but it is not taxed on the IL income. Instead, IL taxes your entire income and then allocates the tax due based on the IL % of income earned. You will need to pay tax to IL. You can make estimated payments or have work withhold some taxes for IL.

For example:

• IL tax on your federal income is $8,000
• But only 10% of your income was earned in IL
• IL tax liability will be 10% of $8,000 or $800.

Buying a vacation home won't change anything as long as you spend less than 9 months living in IL, then you are a resident. You will not qualify for the homeowner's exemption as that is for residents only.

I suggest you keep a log of the days you are physically in IL.

[Scotch]

Does IL also tax my investment income? In your example above, you say that I would pay IL tax on 10% of my income earned there which I assume is based on the number of days there during the year. Would IL also tax my investment income or does that all go under MA? Would I file as nonresident married filing separately since my spouse does not spend time in IL? Or jointly?

[AmyC]

• IL determines the tax on all of your income and then prorates your tax based on your IL % of income. 
• The example was just an example. I have no idea what percentage your income in IL would be out of your worldwide income.
• IL taxes the percentage of your income earned in IL, not the dollar amount. 
  • IL determines the tax on your total income. 
  • Then it multiplies the tax on total income times  (IL income divided by total income).
• You can either MFJ or MFS. If you file MFJ, your IL percentage may be much smaller but your total income would be larger. You can try it both ways.
• IL has a flat tax of 4.95%