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IL resident is self-employed insurance agent earning in WI

Forum|Forum|2 years ago
September 20, 2023
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Taxpayer lives in IL. He is a self-employed health insurance agent for a national company and is licensed in several states. He works from home and also from an office in WI. His payments come from the national insurance company's home office. IL and WI have reciprocity. Does he have to file a WI tax return?

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Best answer by TomD8

"Does he have to file a WI tax return?"

The Wisconsin-Illinois reciprocity agreement applies only to wage and salary (W-2) income. It does not apply to self-employed income.

Wisconsin can tax a non-resident on self-employed income earned from work actually (physically) performed in Wisconsin. Therefore the portion of the taxpayer's income earned when he works at the Wisconsin office is taxable by Wisconsin. He must file a Wisconsin non-resident tax return if his income exceeds Wisconsin's filing threshold for non-residents, which is detailed here:

https://www.revenue.wi.gov/Pages/FAQS/pcs-indreq.aspx#:~:text=a%20tax%20return.-,As%20a%20nonresident%2C%20why%20am%20I%20receiving%20a%20notice%20to,means%20income%20before%20deducting%20expenses.

M

Mike9241

from IL-1040 instructions

an Illinois resident who worked in Iowa, Kentucky, Michigan, or Wisconsin, you must file Form IL-1040 and include as Illinois income any compensation you received from an employer in these states. Compensation paid to Illinois residents working in these states is taxed by Illinois. Based on reciprocal agreements between Illinois and these states, these states do not tax the compensation of Illinois residents.

so the answer is he files only in Illinois

T

TomD8Answer

Employee

"Does he have to file a WI tax return?"

The Wisconsin-Illinois reciprocity agreement applies only to wage and salary (W-2) income. It does not apply to self-employed income.

Wisconsin can tax a non-resident on self-employed income earned from work actually (physically) performed in Wisconsin. Therefore the portion of the taxpayer's income earned when he works at the Wisconsin office is taxable by Wisconsin. He must file a Wisconsin non-resident tax return if his income exceeds Wisconsin's filing threshold for non-residents, which is detailed here:

https://www.revenue.wi.gov/Pages/FAQS/pcs-indreq.aspx#:~:text=a%20tax%20return.-,As%20a%20nonresident%2C%20why%20am%20I%20receiving%20a%20notice%20to,means%20income%20before%20deducting%20expenses.

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