The state tax credit did not show up correctly in Turbotax

[Jeff178]

I lived in IL from Jan to April 2024 and then moved to NY. During that time I was in IL, I worked remotely for a NY employer and paid NY state tax for that part of my income. When I filled this part in the "tax paid to another state" at the tax credit part in my IL state report in Turbotax, it did not correctly show this part of the credit. What shall I do to correct this? Or did I do something wrong? Thanks!

[KeshaH]

When you say that the credit didn't calculate correctly, are you saying that the credit didn't calculate at all or that the credit is different than what you expected it to be?

There are two limitations when it comes to the credit for taxes paid to other states. The credit is usually the lower of:

1. The tax paid in the nonresident state

2. The tax you would have paid in the resident state

What that means is:

1. If NY tax on that income is lower than the tax you owe in IL, then you would still owe IL the difference. 

2. If the tax you would owe in IL is lower than the tax you paid in NY, your credit would be limited. 

Basically, IL is not going to give you a full refund of the tax you paid NY if IL's tax is lower than NY's tax.

If you still believe your credit is calculating incorrectly, we can take a look at your return so we can see exactly what you see and help come to a resolution. The return will be scrubbed and will not include any of your personal details.

Once you're logged in to your account,

- on the left hand panel, click on Tax Tools and then choose Tools

- on the pop up window, select Share my file with Agent

- you'll see a message saying you'll give us a copy of your tax return. Your personal information will be changed so we can't see any private information.

- click okay and you'll get another message with a token

Reply to this message with your token and we'll take a look to see what we can find. Let us know what other states, if any, are included in your return.

[Jeff178]

Hi Kasha,

The credit didn't calculate at all. So I believe there is a bug somewhere in the software or maybe I entered it incorrectly but that is the only place I can find to fill in the tax credit.

When I try to share files with agent, I cannot find this button. On the left hand panel, I can only see two tabs "Tax Home" and "Documents" on the top, and "referral rewards", "Intuit Account", and “sign out" at the bottom, neither one of them has "tax tools" if I click it. I even tried to ask the AI in the app but the AI did not know it either. Can you help me with where I can find the "share my file with agent" button? I am using the "Intuit Turbotax Premium". I tried both the iOS app and the browser version. But neither of them has this tool. Thanks!

[KeshaH]

The Tax Tools menu is only available when you're inside the return and able to input information. When you're logged in, on the Tax Home screen click on any of the tax return topics to open up the tax return. Then you'll see more options on the left hand panel, including Tax Tools.

Did you go through the screens for the credit? There may be additional information needing to be put into the program to calculate. I can verify once you send over the token.

[TomD8]

@Jeff178 --

Did you file a part-year resident return for both states?  Did you complete your Illinois tax return first, before your New York state return?  When doing part-year resident returns, it's important to follow these instructions:

How do I file a part-year state return?

[Jeff178]

Thank you! I can find the tool according to your instructions now. I have sent a copy of my return and the token number is 1274418. Thanks for your help in checking my return.

Here is some more information if you need it: I worked for a New York employer A  from 01/01 to 12/13 in 2024. During that time, I was living in Illinois from 01/01 to 04/30 (Income tax was only withheld and paid to New York state and no income tax was withheld for Illinois) and living in New York after 05/01 in 2024 (income tax withheld for New York state). From 12/16 to 12/31 I was working for another Washington employer B (income tax withheld for New York state only). 

I can understand I may owe Illinois tax. But TurboTax calculated the Illinois tax I owed without considering any income tax I already paid to New York even though I filled in the amount I paid New York state tax for 01/01 - 04/31 (I got this number from my 05/03 payslip showing the tax withheld to New York state ) in the tax credit part in the Illinois return report tab.

[Jeff178]

Yeah, I tried it following the instructions in the link but it is still not working. Thanks for providing the link though!

[KeshaH]

On the Allocate your Illinois and non-Illinois amounts, you will need to fille in the Non-Illinois Amount with the amount you earned in New York while you were a NY resident. (See screenshot.) This will flow through to the proper schedule on the IL return to calculate the credit. 

Also, since you didn't actually earn any income in Washington, you can remove that state from the "Earned income in other state" section of Personal Info. Washington has different rules than New York, so simply working for a Washington employer doesn't constitute earning income in the state.

@Jeff178 

[Edited 2/20/25 @ 5:17pm]

[Jeff178]

Hi Kesha,

Thanks for checking the report for me. May I ask a clarification question about "you will need to fill in the Non-Illinois Amount with the amount you earned in New York while you were a NY resident." Do you mean the amount while I was living in IL or NY?

1. For example, suppose I lived in IL for the first 4 months working for a NY employer and earned 1000 dollars in salary and 300 interest; and lived in NY for a NY employer for the rest 8 months and earned 2000 dollars in salary and 500 interest. Shall I fill:
Wages: Illinois amount: 1000 dollars, and non-Illinois amount: 2000 dollars 

Interest: Illinois amount: 300 dollars, and non-Illinois amount: 500 dollars

2. After I filled this non-Illinois amount, do I need to delete the item "income tax paid to another state" in the IL report? Or shall I still keep it?

Thanks!

[KeshaH · Accepted solution]

Sorry, that was a typo and should have been the amount you earned in New York while an Illinois resident. 

So if you worked in Illinois for the first four months and made $1,000 but that $1,000 is all considered New York source income, you'd put $1,000 in that column.

You don't need to delete anything on the other state credit form, it will all be used to calculate your credit.

[Jeff178]

Thank you! The tax credit showed up after I followed your instructions. I filed my report in the app. Thank you for your help!