Residences for Internship in 2021

[gudetama17]

Hi, 

During the year 2021 I was

• A graduate student in the state of Illinois in the Spring 2021 semester from the dates January 1 to May 10. 
• An intern in the state of Wisconsin from the dates May 10 to August 21. 
• Back to being a graduate student in the state of Illinois for the Fall of 2021 from the dates of August 21 to December 31.

I had a temporary residence in Wisconsin for the dates of that internship and lived in Illinois during the dates I was a student. My W-2 from my Wisconsin employer lists my new Wisconsin address (I have moved in early January  2022 to Wisconsin) but I believe my employer had my Chicago address during my internship because I paid Illinois income taxes and Wisconsin income taxes during my internship according to my payslips. My Wisconsin employer's W-2 even lists Illinois in box 15. When trying to file my taxes on turbotax the questions about my residency in wisconsin have been quite strange. Things like "why didn't you buy a car or a home in wisconsin/illinois" and it doesn't seem to understand that I was only temporarily living in wisconsin as it will asks things like "when did you move out of wisconsin" when I both moved into WI and out of WI in 2021. Is my Wisconsin employer's W-2 correct to list IL in Box 15 and how do I answer these questions correctly on the online tax filing app?

[RobertB4444]

Multiple state tax returns can be tricky.  You need to do the Wisconsin return first.  If you already did the Illinois return then you should delete it and delete the Wisconsin return you've started and start over by doing Wisconsin first.  You should be registered as a part-year resident of Wisconsin and a resident of Illinois.  Illinois will give you a deduction for taxes paid to Wisconsin while you were there being an intern but you have to do Wisconsin first to make sure Illinois gives you that deduction.

[gudetama17]

Thanks so much for the reply! One question: I am then prompted with the question asking which of the following best describes my residency in WI:

resident of WI all year

changed legal residence from WI in 2021 and have not moved back to WI

changed legal residence from WI during or before 2021 and did move back to WI

changed legal residence in 2021 to WI and wasn't a resident of WI any previous year 

nonresident of WI for all of 2021. 

At least in 2021, none of these seem to apply. I have moved in January of 2022 back to WI but for the earnings I made in 2021 I was a graduate student in Illinois for the rest of 2021 after moving back. Which one would be best to select?

Thanks in advance!

[MarilynG1]

Choose 'changed legal residence in 2021 to WI and wasn't a resident of WI any previous year'.  

It's interesting that Wisconsin is asking so many questions!  Most states simply ask for the dates you moved in/out of the state.  Do the best you can answering these; the net out being that you were a part-year resident for four months (and a part-year resident of IL for 8 months).

To figure state taxes owed, many states take your total income from your Federal return and calculate a % of it as being earned in that state, based on the number of months you lived there.

However, other states ask you to split out your income between their state and the 'other state' (this info hopefully being on your W-2 so no calculations are required by you), so don't despair if the calculations on the state returns seem odd.

It's also interesting that your employer withheld both Illinois and Wisconsin tax on your pay, since they are 'reciprocal states'.  Enter your W-2 as it is shown, and the state returns in TurboTax will sort it out. 

Click this link for more info if you're interested.

Don't worry about the address on your W-2; the current address for a taxpayer may not be in any of the states they worked in!   The IRS only needs to know where you are now.  

This link has more info on preparing a Part-Year Resident Return. 

[gudetama17]

Hi again, 

Looks like I have one more tricky question. I went back to the personal information section of my taxes and wanted to ask what to fill in here. I list that as of December 31, 2021 I was a resident of Illinois. I then list that yes I did live in another state in 2021 and that state was Wisconsin. It then asks what date I "became a resident of Illinois". Now this wording has confused me because, as I mentioned, while I moved back to Illinois on 08/21, I was sort of always a resident of Illinois in 2021 and merely a temporary resident of Wisconsin. Should I be putting a different date from the date I returned from my internship. 

Thanks again for all of your help. 

[gudetama17]

And I should add one more thing: It is quite confusing what to do when I try to report on either of the state returns that I owe taxes to another state. 

• If I try to report taxes paid to wisconsin on the Illinois return, I am told that since these states are reciprocal states, I should not be listing any taxable income that showed up on my w-2. But I am confused here because I know I was paying Illinois taxes while living and working in Wisconsin. 
• If I try to report taxes paid to illinois on the wisconsin return I am prompted with a pretty complicated form and little guidance on how to fill it out.

Which state's return should be listing taxes paid to the other state?

[ErnieS0]

You never say what state you were a resident of @gudetama17. If you were a student/intern for all of 2921, what state was your permanent home?

Assuming you are an Illinois resident, your internship in Wisconsin would be a temporary absence of limited duration. i.e. not temp-to-hire.

Therefore you would remain an Illinois resident during your internship even if you lived in one place in Illinois at the beginning of 2021 and lived somewhere else after your internship.

In Personal Info, tell TurboTax 

1. Your state of resident on December 31 was Illinois
2. No, you did not live in another state, and 
3. In Other state income say you made money in Wisconsin
4. Fill an Illinois resident return and a nonresident Wisconsin return. You can claim a credit on your Illinois return for tax paid to WI.