State taxes

[dmarcottema]

My employer is in Illinois. My withholdings are held for Illinois. I live in Indiana. Since March 2020, I have been working remotely from my home in Indiana and have now successfully made it my official duty station going forward. How do I file my 2021 state returns when Illinois has my withholding, but I have not worked in Illinois for 2 years?

[DaveF1006]

It depends.  You will need to file a non-resident return for the State of Illinois to get your withholding payment back that was withheld by the State of Illinois. When you prepare your return, prepare the Illinois non-resident return before preparing your Indiana resident return so you will get credit for the taxes you paid in Illinois.

[dmarcottema]

Thanks!  When you say it depends, if there more I should be aware of?  

[AmyC]

IL taxes IL based income so you will file a tax return with IL to pay taxes on IL based income. Prepare that return first. Then prepare your resident state return and it will calculate a credit of the lower of the two states tax on the IL income.

See IL filing requirements.