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New Member
posted Apr 13, 2024 3:09:46 PM

Reciprocal State Tax agreement WI-IL

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3 Replies
Expert Alumni
Apr 13, 2024 3:29:03 PM

Reciprocal agreements are when an employee pays tax to the state in which they live even if they physically work in the other state. 

 

Did your employer withhold and pay tax to the state in which you live or for the state where you work?

Level 15
Apr 13, 2024 6:32:36 PM

you only pay income taxes on wages in the state where you have domicile even if all your work was done in the other state. . 

GENERALLY:

Schedule C and business earnings are be taxed by both states if some or all of it was earned in the non-domicile state. Investment income is taxed only in the state of domicile. both states tax rental income earned in the other state including any gain on sale.     

New Member
Apr 14, 2024 11:53:28 AM

That's exactly how it worked for the past 43 years.  When my job was eliminated, and I collected IL unemployment insurance, I found out that unemployment compensation was taxable as income earned in Illinois with taxes due in Illinois - regardless of your residency (Wisconsin). I filed my 2022 taxes using TurboTax IL in addition to Turbotax Federal and Wisconsin versions.

 

I received a letter from the IL secretary of state correcting my IL return and taking an additional $50 out of my IL return.