Question

double taxed in CA and IL

Forum|Forum|2 years ago
August 30, 2023
2 replies
0 views

Hi everyone,

I had income in CA that was incorrectly withheld from IL tax in 2022. I was withheld $19k to IL, which is $9k more than it should have been. When I filed my CA return, it said I owed $3k to CA. But the strange thing is, after I entered the payment I have made to IL, it says there's still a balance of $1132. This doesn't make any sense. I have paid $9k extra to IL but it doesn't offset the entire $3k balance owed to CA? Aren't I still being double-taxed despite claiming the tax payment credit?

X

xmasbaby0

Employee

Please explain where you lived and where you worked. Or...did you move from one state to the other during the tax year? It is unclear whether you needed to file part-year returns for each of the states or whether you should have filed a non-resident return for one of them. When you live in one state and work in another, it is very important for you to prepare the NON-resident state return first so that you get credit from the resident state for the tax paid to the non-resident state.

Provide some details so you can get better help here.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

C

coolbeanAuthor

I lived in IL and moved to CA in Aug 2022. I was working remotely and my company had offices in both states. HR didn't update my work location so my withholding was messed up.

X

xmasbaby0

Employee

https://ttlc.intuit.com/questions/1901227-how-do-i-file-a-part-year-state-return

https://ttlc.intuit.com/questions/1901560-how-do-i-file-if-i-moved-to-a-different-state-last-year

https://ttlc.intuit.com/questions/2895983-how-do-i-allocate-split-income-for-a-part-year-state-return

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

T

TomD8

Employee

There is no "tax credit" to be claimed unless you physically worked in CA while still an IL resident, or physically worked in IL after becoming a CA resident.

IL can tax what you earned in IL; CA can tax what you earned in CA. If you allocated your income correctly between the two states, then your tax returns are probably correct.

Illinois will refund any excess withholdings that your employer paid. Conversely, if you were under-withheld for California, then you'll have taxes due to California. Your Illinois refund may or may not cover your entire California tax bill - it'll depend on the actual amounts. You won't be double-taxed.

Tip: Did you deduct your moving expenses on your California return? A deduction for moving expenses is no longer permitted on your federal return, but California still allows it.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

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coolbeanAuthor

The thing is, IL did not refund the excess that my employer withheld when I was not working in IL. They require a letter from my employer to refund this but my employer refused to provide it. I'm now trying to claim tax credit with CA to avoid being double-taxed. But according to the calculation (paying $1000 to CA on a wage that's already taxed in IL) I am still being double-taxed.

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Opus 17

Employee

@coolbean wrote:

The thing is, IL did not refund the excess that my employer withheld when I was not working in IL. They require a letter from my employer to refund this but my employer refused to provide it. I'm now trying to claim tax credit with CA to avoid being double-taxed. But according to the calculation (paying $1000 to CA on a wage that's already taxed in IL) I am still being double-taxed.

Here's what you should have filed.

It sounds like you were a part-year resident of IL and a part-year resident of CA, if your permanent home was in IL and then you moved to CA. (To be a non-resident of both states, you would have to have a permanent residence in some third state.)

Your part-year resident IL return will report and pay taxes on all your world-wide income from 1/1/22 to the date you moved (the date you changed your state of permanent residence). Your part year CA return will report and pay income tax on all your world-wide income you received starting on the date you moved through the end of the year. If you only had IL withtholding, you should be overpaid to IL and underpaid to CA, so get a refund from IL and owe to CA.

There are no tax credits here for a resident who paid tax in another state, that is only an issue for a non-resident return, and you should not have filed non-resident returns. You pay only CA tax for the part of the year you lived in CA and only IL tax for the part of the year you lived in IL.

Illinois should not need proof from your employer that you moved, they should only require proof from you that you moved (changed your permanent address).

I suspect you need to file amended returns with both states. If you are already in contact with IL, you should call them back, explain your situation, tell them you want to file an amended return as a part-year resident, and see if that will be acceptable to them.

You may need to hire a professional to help straighten this out.