Why is it saying I need to pay Illinois states taxes? I answered that I live in Iowa but work in Illinois. Iowa & Illinois are reciprocal.

Did you get a w-2 that showed Illinois wages and withholding?   To get back Il w/h you would have to file a nonresident Il return indicating you were a full year resident of indiana

. if not, there was a question about earning income in another state to which you should have answered no

 

PER IOWA

Any wages or salaries earned by an Iowa resident working in Illinois are taxable only to Iowa and not to Illinois. Any wages or salaries earned by an Illinois resident working in Iowa are taxable only to Illinois and not to Iowa.

Iowa will tax any Iowa-source income received by an Illinois resident that is not from wages or salaries. Illinois may tax any Illinois-source income received by an Iowa resident that is not from wages or salaries.

Iowa gambling winnings and unemployment compensation for employment in Iowa are examples of income that are not wages and salaries and, therefore, not covered under the Iowa-Illinois Reciprocal Agreement.

Iowa Resident Working for Wages or Salary in Illinois
An Iowa resident working for wages or salary in Illinois should complete and file Illinois form IL-W-5-NR Employee's Statement of Nonresidence in Illinois with the employer so that the employer will withhold Iowa income tax.

In the personal info section, when it asks if you made money in another state, answer NO, per the reciprocal state instructions, on that page. This will prevent TurboTax from thinking you need to file an IL return.