1. Yes. IL DOR states: a nonresident, you must file Form IL-1040 and Schedule NR if you earned enough taxable income from Illinois sources to have a tax liability (i.e., your Illinois base income from Schedule NR, Step 5, Line 46, is greater than your Illinois exemption allowance on Schedule NR, Step 5, Line 50)
2. Since you are a PA resident, they will give you a credit for the income already taxed by IL. The credit will be the lower of the state tax liabilities on the same taxable income. You may owe your resident state, if they have a higher tax rate along with differences in how the taxable income is calculated.
Please carefully follow these directions to prepare the states in a special order. You may need to delete both states and begin again.
- First, prepare your non-resident IL return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
- Then prepare your resident state PA return and it will generate a credit for your income already being taxed in the non-resident state.
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