I lived in IL and worked in IN from 01/01/22 to 08/26/22 then moved to IN and continued to work in IN as an IN resident from 08/27/22 thru 12/31/22. I have one W2 that has IN Income and IN State Withholding. $50K Indiana Wages and $2500 Indiana State W/H. My wages were $50K in total from my W2 box 1. I figured out that $40K was earned as an IL resident (Jan 1 - Aug 26) and the remaining $10K earned as an IN resident (Aug 27 - Dec 31)Do I report only the wages I earned with the respective state as Part Year Resident? I would show $40K for IL and 10K would be reported in IN?Would I qualify for credit paid to other state? If so, would I claim the credit paid to other state on my Illinois state return because I earned $40K from Jan - Aug 2022 while I worked in IN as an IL resident?And if I do get a credit paid to other state on my IL return would I calculate the credit off the $40K I earned from IN while an IL resident?And I wouldn't get a credit paid on my IN return correct? I don't believe I do because I moved there in Aug and earned $10K as an IN resident? I don’t believe I have any allowable credit that would come from IL return and go on my IN return. Just verifying what I am thinking.If I do qualify for credit paid to other State on my IL return, would I first create IN Part Year State return only showing the $40K to get the taxes paid off of that amount earned as an IL resident, then report that on my IL 1040 and once that is done, go back into my IN return and remove the $40K and report the $10K that earned as an IN resident? Is that correct? Or am I totally wrong. Any guidance would be greatly appreciated. Thank you in advance.

taxesohmy2017

Employee

Question

Lived in IL worked in IN but then moved to IN, continue to work in IN. Question about reporting income for 2 Part Year State Returns

Forum|Forum|3 years ago
February 20, 2023
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I lived in IL and worked in IN from 01/01/22 to 08/26/22 then moved to IN and continued to work in IN as an IN resident from 08/27/22 thru 12/31/22.

I have one W2 that has IN Income and IN State Withholding. $50K Indiana Wages and $2500 Indiana State W/H.

My wages were $50K in total from my W2 box 1. I figured out that $40K was earned as an IL resident (Jan 1 - Aug 26) and the remaining $10K earned as an IN resident (Aug 27 - Dec 31)

Do I report only the wages I earned with the respective state as Part Year Resident? I would show $40K for IL and 10K would be reported in IN?
Would I qualify for credit paid to other state? If so, would I claim the credit paid to other state on my Illinois state return because I earned $40K from Jan - Aug 2022 while I worked in IN as an IL resident?
And if I do get a credit paid to other state on my IL return would I calculate the credit off the $40K I earned from IN while an IL resident?
And I wouldn't get a credit paid on my IN return correct? I don't believe I do because I moved there in Aug and earned $10K as an IN resident? I don’t believe I have any allowable credit that would come from IL return and go on my IN return. Just verifying what I am thinking.
If I do qualify for credit paid to other State on my IL return, would I first create IN Part Year State return only showing the $40K to get the taxes paid off of that amount earned as an IL resident, then report that on my IL 1040 and once that is done, go back into my IN return and remove the $40K and report the $10K that earned as an IN resident? Is that correct? Or am I totally wrong.

Any guidance would be greatly appreciated. Thank you in advance.

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DavidD66

You need to report a part year resident return for both Illinois and Indiana. For your Illinois, you will only report the income you earned while a resident of that state. For Indiana, you will report 100% of your income since you earned 100% of your income in Indiana. You should get a credit on your Illinois return for the tax you paid to Indiana while an Illinois resident. That credit is calculated on the income you paid tax on to Indiana, while an Illinois resident. You will not receive a credit on your Indiana return for tax paid to another state. Finally, yes - you should create your Indiana return first and determine the amount of tax paid on your income earned in Indiana while an Illinois resident.

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taxesohmy2017Author

Employee

okay, let me just make sure I am understanding this correctly,

For IL PT Year Resident, I will only claim what was earned as an IL resident which would be the $40K.

And for credits paid in other state I would first create my IN PY return just showing the amount of $40K on the Schedule A column B (income taxed by Indiana), than take that credit and apply it to my IL 1040 return.

On the Indiana Schedule A Column A shows $50K which carries over from my Federal 1040 and I would enter $40K on column B for Income taxed by Indiana to calculate the credit paid correct?

Then, go back into my IN PY return and change my reporting income to the full $50K in column B on the Schedule A, not the $10K that I earned from Aug thru Dec as an IN resident. I am reporting all $50K on my Indiana return even though $40K of it was earned while in IL. And no credits paid to IL on my IN return. Am I understanding this correctly?

I thought on my Indiana return for part year, that I would only report the $10K since I earned it while as a IN resident, not the $50K since I am already reporting $40K on my IL return. But you're saying since I earned the entire $50K in Indiana regardless of my PY residency that full amount gets reported on the Indiana Tax Return on the Schedule A column B. Am I understanding this correctly?

DMarkM1

Yes. You are understanding correctly. All the income $50K is IN source income and taxed by IN. While you were a resident of IL, the income was double taxed (both states), but you claim a credit on your IL return for the tax paid to IN for that double taxed portion.

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