I worked in a state that has reprocity with the state I live in and should get all of the tax I paid back but turbo tax is telling me I owe them money. Help?

Forum|Forum|1 year ago
February 11, 2025
2 replies
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I went to another tax prep service in my area that said I should get all of the money back from the state I didn't live in.

KrisD15

Yes.

If you work in one state and live in another, and the states have a reciprocal agreement, you only pay tax to the state in which you live.

If your employer withheld the wrong state tax, you need to file as a non-resident with that state to get the tax refunded.

You also need to file your home state tax return, claim that income, and pay the tax that was not properly withheld.

Depending on the tax rate of the two states, it could be a wash, or you could owe additional tax to the home state.

TurboTax knows which states have reciprocal agreements and will calculate for that.

Be sure to list your home state as your resident state.

Report for the work state first to get the refund.

Report for the home state to pay the tax.

If you are still having issues with the program not recognizing the reciprocal states, please tell us:

the home state

the work state

the state listed in Box 15 on the W-2

the state you listed as your resident state in the "Personal Info" section

which state you started first

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stick01-a3Author

the home state is WI

the work state is IL

the state listed in Box 15 on the W-2 is IL

the state you listed as your resident state in the "Personal Info" section WI

which state you started first IL

MindyB

You should file a Wisconsin tax return like usual, reporting all of your wages, and reporting only the Wisconsin tax withheld. You may end up owing taxes to Wisconsin, since some taxes were paid to Illinois (which will be refunded separately)

Since you are filing the Illinois non-resident return solely to get a refund of Illinois tax, you will file the return and allocate $0 income to that state, assuming there was no other income earned in Illinois, just the wages you mentioned. Here's how to do this in TurboTax Online:

When you start the Illinois return, answer that you made money in Illinois but never lived there.
Tell TurboTax you lived in Wisconsin.
Continue until you arrive to the screen "Tell us about your Illinois income." If as a hypothetical example, you earned a total of $129,000, but $50,000 was on your Illinois Box 16 line of the W-2, $50,000 will appear in the box "How much of the $129,000 dis you make while living in Wisconsin" automatically. Make this entry zero.
Continue through the interview and make sure nothing has an Illinois share.
Your return should calculate a refund of all the tax withheld in Illinois.

Here is some more information: Which states have reciprocal agreements?

Hal_Al

Employee

You need to identify the two states. The interviews, in TurboTax (TT), go differently when reciprocity is involved. In many cases the states have a simplified form, for claiming a reciprocal refund, and you may be able to avoid the TT fee for a 2nd state tax return.