Question

Double Taxation between IL and NY State

Forum|Forum|2 years ago
December 17, 2023
2 replies
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Hi All, I am employed 100% remotely. I live in IL but my employer is based in NY. Because of the NY law of convenience I am receiving a NY W-2, and need to file a NY Non-resident return, as well as IL.

I am technically not eligible for the credit for taxes paid to NY-state because the income was sourced within the state of IL, and I did not physically travel to NY to earn that income. Even though I have not stepped foot in NY, I am being double taxed.

What are my options here? Do I have an option to get my employer to give me an IL W-2?

Employee

I am technically not eligible for the credit for taxes paid to NY-state because the income was sourced within the state of IL, and I did not physically travel to NY to earn that income. Even though I have not stepped foot in NY, I am being double taxed.

doesn't seem to agree with Illinois IL 1040-CR instructions. However, forms and publications are unofficial from a standpoint if they conflict with the actual tax laws.

in another thread, most OPs stated that you could claim credit for the double tax income. however, one respondent had a different answer supposedly based on actual experience.

https://ttlc.intuit.com/community/state-taxes/discussion/live-in-il-but-work-for-ny-company-unsure-about-allocate-your-illinois-and-non-illinois-amount-was/00/545908

Not true. I just went through this. IL Department of Revenue is going to send you mail audit asking for your employer to provide days worked in each state. No employer will do that and therefore IL will not allow credit. Publication 302 exception (? no current Ill PUB 302). Also, there is a case that went through the IL court system in 2015 that allows for that double taxation scheme, so basically save yourself 10% in penalties and pay tax in both states…

‎July 6, 2022 5:08 PM

I do not know NY law so is it possible that you are entitled to a credit in NY for the wages taxed by Illinois?

M

minivatreniAuthor

Thank you - it looks like people are filing for the credit and getting it successfully.

When I read the instructions for Illinois Schedule CR: column b, you are to put the non-Illinois income “as determined using Illinois’ rules for sourcing income.” I cannot for the life of me find Illinois’ rules for sourcing income anywhere... Therefore, I assumed that income sourced in IL-state would not be eligible for the credit. California has a similar rule for denying credit, but you can easily read about this online.

Critter-3

In the TT program you will complete the non resident NY return FIRST and then the resident IL return where IL will give you credit for the taxes you pay on the NY sourced income because NY taxes remote workers.