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unemployment income taxed on 2 state returns

I filed part year returns in Iowa and Illinois after moving to Iowa in 2020.  I have unemployment income that is being captured on both Iowa and Illinois so it is getting taxed twice by both states.  I move to Iowa for a job so it should be just on the Illinios return.  I am claiming Iowa residency for 2020 and I can't remove that income from Iowa return.  Please advise a fix. Thanks

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2 Replies
DawnC
Employee Tax Expert

unemployment income taxed on 2 state returns

You might think that part-year taxes are proportional to the amount of time spent in the state, but that's often not the case.  Most states divide the income earned in that state by the total annual income to come up with a percentage. That percentage is then applied to the state tax on the entire year's income—no matter where it was earned—to prorate the tax liability. TurboTax follows the rules for each state.  You are a part-year resident of both Iowa and Illinois in 2020.

 

TurboTax handles part-year returns, but you need to make sure you've set up your personal information correctly for us to do so. We'll ask about where you lived in 2020 when you set up your personal information.   Go through these steps first to ensure you have your part-year returns set up properly before you allocate your income between states.   When you complete part-year returns, you will allocate your income between states. 

 

Unemployment is considered unearned income.  Allocating unearned income is pretty straightforward: just allocate it to the state you were a resident of when you received it.  For examples and instructions on how to allocate your earned income, please see - How do I allocate (split) income for a part-year state return?

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unemployment income taxed on 2 state returns

Thanks!

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