My son who is a college student in North Carolina received a w2 for work study this past fall, 2021. his income was not taxed at all and is only $576. In 2021 he worked part-time while in high school and received a w2 for income earned in Illinois (his home state, lives with us) of $8069. I have several questions. Do I report the North Carolina Work Study income on his Illinois State Return? Or do I file a separate North Carolina state return for his work study income while in school in NC AND not include it on his Illinois return? Additional info - he had unearned income of $4668 from a school grant that paid for room & board. So essentially, where does he report each income? on a return for the state where it was earned or only on his home state's return (Illinois) THANK YOU
Everything gets reported on his IL state return. His resident state taxes all income from all sources. He will also file a non-resident NC return for only the work study W2 income.
He should complete the NC non-resident return first and take note of the income taxed and the tax imposed by NC on that income. Those amounts will be used to then claim a credit on his IL return for taxes paid to another state to mitigate the double taxation.
You will find the credit for taxes paid to another state in the credits section in the IL interview.