We lived in Illinois until mid-June of the year and my wife worked for a company headquartered in Florida starting Jan 1st through the end of the year.

[jandjandcayandbo]

....I had income from my self-employed business in Jan and Feb (only) in Illinois and the family moved to Florida in June. Florida does not have State income tax. So do we file our regular Federal return + apartial return for Illinois for my business + file her income in Illinois for only the dates that we lived in Illinois and then pay no income tax for the rest of the year in any State? And can we deduct any closing costs that we did not expense to the company in the move?

[DS30 · Accepted solution]

Yes, you will file your federal return as you usually do and a part-year IL state income tax return for all income from all sources (including the income from the FL company) up to the date that you moved to/changed residency to FL. (No FL state return because FL has no state income taxes on wage income.)

As for closing costs, if these related to your home, you will be not be able to deduct these closing costs on your return but instead will increase the basis in your property to include these costs.

You do not need to enter or report the sale of your primary residence if:

• You never used your primary residence as a rental or took home office deduction
• You have a loss on the sale of your home (Personal capital losses are not reported on your tax return)
• You did not receive a Form 1099-S and
• You meet the home gain exclusion (see below)

You can take the gain exclusion as long as you considered the home your "primary residence" for 2 of the last 5 years. If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse. See  Sale of Your Home for more information on the exclusion.

If you still need to enter your sale of your primary residence (which may require an upgrade in TurboTax), please follow these steps:

1. Once you are in your tax return (for TurboTax Online sign-in, click Here), click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on "Add more income” (then "See list of all income") ( “I’ll choose what I work on” in TurboTax Home & Business)
4. Scroll down the screen until to come to the section “Less Common Income”
5. Choose “Sale of Home (gain or loss)” and select “start’
6. You will want to use the "Easy Guide" to determine the adjusted basis on this home 

Say "yes" that you sold your main home and TurboTax will guide you on entering this information.  You will need:

• The date you sold your home and the selling price (from your closing statement)
• The date you bought your home and the purchase price (from your closing statement)
• The cost of any major improvements you made, so we can deduct them for you
• Form 1099-C if you sold your home at a loss (short sale)

Just remember to check the box to have your home sale reported on your tax return but ONLY if you receive a 1099-S

[jandjandcayandbo]

Thank you for the very informative and prompt answer! I had not thought about the capital gain on the home sale in Illinois. We actually sold it for less than we purchased it for, however it was not a short sale...we had equity in the home in other words, despite the sale price being so much less than our former purchase price...if that makes sense.