Reporting WI state taxes paid in 2022 to IRS for prior years 2017-2020.

[JJGauger]

I participated in the WI Voluntary Disclosure Program for payment of back taxes from 2017-2020 when my CPA failed to report Rental Income in WI, but instead included the income on my IL tax returns in error.  I discovered the error when I began filing taxes myself using TurboTax last year.  Rental property income is recognized in the state in which it is earned!  Thanks, TurboTax for identifying this issue for me!

As a result of the WI Voluntary Disclosure Program, I filed and paid 4 years of back taxes to WI for the Rental Income amounting to several thousand dollars of additional tax payments in 2022.  I also submitted amended returns for to IL for 2017-2020 to recoup the tax paid to IL in error.  IL did not process refunds for any of the amended returns and due to limits on filing amended returns will only refund 2 of the 4 years.

Questions:

1.  When filing my 2022 Federal 1040, do I include the additional taxes paid to WI in 2022 as a result of filing new returns under the WI Voluntary Disclosure Program?

2.  Since I did not receive any refunds from IL in 2022, would I include any refunds received from IL when filing the 2023 Federal 1040 next year?

It is very likely that the impact of the IL refunds vs WI taxes paid for the four years of amendments will result in additional net state taxes paid.

I am assuming that any taxes paid or refunds received should be included in the respective sections of the Federal 1040 in the year in which taxes are paid or refunds are received from amended state returns.

Thanks,

JG

[MarilynG1 · Accepted solution]

Yes, you can report taxes paid to Wisconsin in 2022 for prior years in the Other Income Taxes topic under Deductions & Credits.

Refunds you receive from Illinois may or not be taxable, depending on whether you itemized deductions in the year the refund applies to. 

@JJGauger 

[JJGauger]

MarilynG1 - thanks for your advice and response.  Thanks for mapping out where to go in the system.  Greatly appreciated!  JG