I live and work in Illinois but maintain my residency in Texas due to husband's military orders. What do I need to do to prepare for this year's taxes?

Forum|Forum|6 years ago
August 14, 2019
2 replies
0 views

Illinois state taxes are being taken out of my paycheck every pay period. I have never had to file a state tax return since I have always earned income in Texas, will I now have to file both Illinois and Texas?

TurboTax Deluxe Online

DoninGA

Employee

You would file an Illinois nonresident state tax return to report the Illinois income. Texas does not have a personal income tax so there is no Texas state income tax return to file.

Carl11_2

Employee

You will only file an IL non-resident tax return since TX does not tax personal income. Additionally, you do not qualify for MSRRA either, for that same reason. So the bottom line is, you will pay IL state taxes only on that income earned while working for an employer in that state. If your military spouse's home state is not IL, then no state taxes will be paid on his military income to any state.

caralissahoAuthor

I am confused on why I would not qualify for MSRRA.

Not only is my husband a resident in Texas, but I am as well. As far as legal paperwork goes, I am still a resident in Texas (from what I understand). I maintain my Texas driver's license, I am registered to vote in Texas, my vehicles are still registered in Texas, etc. Also, I have earned income in Texas for the past 8 years (including te beginning of this year).

With all of these things considered, should I not receive a tax return from IL for the taxes taken out of my paycheck since I am not legally a resident of Illinois? And although I know that I do not file a Texas State Tax return, since there is none, how do I prove my residency on my IL Tax Return?

Thanks for your help, just trying to understand everything!

TomD8

Employee

You DO qualify for MSRRA. Section 302(B) of the new tax law says this: "For any taxable year of the marriage, the spouse of a servicemember may elect to use the same residence for purposes of taxation as the servicemember regardless of the date on which the marriage of the spouse and the servicemember occurred."

https://www.congress.gov/bill/115th-congress/senate-bill/2248/text

To obtain a refund of incorrectly withheld Illinois taxes, you must file a non-resident Illinois tax return, showing zero Illinois income.

You should also file Form IL-W-5-NR with your Illinois employer. Here's a link to that form: https://www2.illinois.gov/rev/forms/withholding/Documents/currentyear/il-w-5-nr.pdf

Filing that form will cause your employer to cease withholding Illinois taxes.

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