Question

How to allocate income between states

Forum|Forum|3 years ago
February 19, 2023
1 reply
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I work for a firm in Illinois, have an apartment there that I rent, but just bought a condo in Minnesota at the beginning of October of 2022 that will be my main residence. I worked continuously in Illinois up until I bought my condo and now work a couple of weeks there each month and a couple weeks each month remotely in Minnesota. I plan to continue this set up for quite a while. My question is do I have to allocate my income to Minnesota even though the office is in Illinois and the company does not have an office in MN? I remote in from my home in Minnesota when I am there every couple of weeks. My employer took out Illinois taxes on my W2. If I do have to allocate my income between these two states, how should I go about that? Any advice would be greatly appreciated.

KrisD15

It sounds like you work in Illinois and therefore will pay Illinois tax on your income.

I do not suggest you allocate the income between the two states.

Remote work can be taxed in the resident state, but your description shows you are not really a remote worker, but an employee that is allowed to work remotely at times for your convenience.

How this will work (going forward) you will file as a non-resident for Illinois and claim the income. You will be taxed on that income by Illinois.

Next, you will file a resident state return for Minnesota and again claim your income, HOWEVER you will receive a credit on your Minnesota for the tax you pay Illinois.

Please be sure to follow this order (non-resident state first, then resident state) so that the TurboTax program knows the amount of Illinois state tax paid to credit on your Minnesota tax return.

If you ever work totally from home with fewer than 30 days in Illinois, you may be able to claim all your income on your Minnesota return only.

Here is a link with a similar question.

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