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March 9, 2021
Question

Live in one state and work in another

  • March 9, 2021
  • 1 reply
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I live in Indiana and my employer is in Illinois.  Prior to COVID, I was working in Illinois.  Once COVID began, I was working from my house in Indiana full time starting 3/6/20 and was not allowed to enter the office in Illinois.  Do I claim income earned from 1/1/20 - 3/6/20 in Illinois and income from 3/7/20 - 12/31/20 in Indiana?

    1 reply

    March 9, 2021

    The income earned from 1/1/20 - 3/6/20  is subject to Illinois tax but all your 2020 income is subject to Indiana tax. As a resident of IN, all your income is subject to IN tax no matter where it is earned.

     

    File a non-resident IL tax return covering your IL earnings from 1/1/20 - 3/6/20, and paying state tax on those earnings.

     

    File a resident IN tax return reporting all your 2020 earnings. IN will give you a tax credit for what you paid IL on the "double-taxed" income. This is how state avoid "double-taxation.

     

    Work on your non-resident IL state tax return first. You will then take a tax credit from your non-resident IL return on your resident IN state tax return. (Please note that you will only get a tax credit for your IL taxes up to the amount of IN taxes that would have been paid if the income was earned in IN). 

      

    Just follow the TurboTax guide when working on your states (remembering to do your non-resident state return first) and TurboTax will do all the calculations for the credit to your resident states return