Living in IL (Chicago) but working remotely for a company in NYC. Double taxation?

Forum|Forum|2 years ago
December 15, 2023
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I am working for a NYC based company, and they allowed me to work remotely, so I moved to Chicago in April 2023. I've been living in Chicago ever since.

I know that NY is one of the few states that taxes remote workers. I read online however that if you are subject to the convenience of the employer rule, you are double-taxed, because IL will not give you a credit for your remote work actually performed in IL.

But then I saw Illinois will allow you an "other state credit" for the taxes you pay to a non-resident state on dollars that are also taxed by Illinois, because the Supreme Court has ruled that it is unconstitutional for states to fail to provide credit for taxes paid to other states. (Comptroller of the Treasury of Maryland v. Wynne, 575 U.S. 542 (2015)). The ruling in effect outlaws double taxation by states.

I am confused because I am seeing opposite answers... Does IL give you a credit for taxes paid via NY's convenience rule, or will I just have to pay taxes in both states?

Best answer by TomD8

From the Illinois Schedule CR instructions:

"Taxes that qualify for the credit are income taxes you paid to another state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States, or to a political subdivision (e.g., county, city, local) of one of these jurisdictions."

Also:

"A part-year resident may only take a credit on income earned while a resident of Illinois."

Thus the only qualifiers are that 1) you earn the income as a resident of Illinois; and 2) that you pay income tax on it to another state as well as to Illinois.

TomD8

Employee

Yes, Illinois will allow you an "other state credit" for the taxes you pay to a non-resident state on dollars that are also taxed by Illinois.

The Supreme Court has ruled that it is unconstitutional for states to fail to provide credit for taxes paid to other states. (Comptroller of the Treasury of Maryland v. Wynne, 575 U.S. 542 (2015))

The ruling in effect outlaws double taxation by states.

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

minivatreniAuthor