Do I have to pay Wisconsin income tax if I am a resident of Illinois?

Question

I recently worked a temporary job in Wisconsin. The employer withheld Wisconsin state income tax. Since I am a resident of Illinois, am I obligated to pay that tax? Can I file a return to recoup those monies? And am I obligated to pay taxes on that income to the state of Illinois?

Answer 1

No.  Because your situation is an exception to the rule.

In general, when you work in a state you are required to pay income tax there.  You then get a credit for that tax against your home state's tax.

However, several states in the Northeast and Midwest have reciprocal tax agreements with neighboring states.  In this case, people who live in one state who work in a reciprocating state, only pay tax to their home state.  Illinois has reciprocating agreements with Iowa, Kentucky, Michigan, and Wisconsin.  So come tax time you will file a Non-Resident tax return with Wisconsin showing zero income and the withholding they took and a letter stating that you live in Illinois and are not subject to income tax on wages earned in Wisconsin.  You will get a refund from Wisconsin for any taxes paid.  Don't spend it though, because you'll owe taxes on that money to Illinois.

Answer 2

For the most part, your wages are taxed based on where you earned the money. You were in Wisconsin, so yes, you must pay taxes to Wisconsin on that money. You will have to file a nonresident return in Wisconsin and you will apply for a credit on your Illinois return. The "good" news is that taxes in Wisconsin are higher than in Illinois, so you will likely get enough of a credit to avoid paying Illinois.

I hope this helps.
Gary

Answer 3

you will file a non resident Wisc tax return and hopefully some will be refunded
and yes, more than likely Illinois, like most states, includes income from all sources in Illinois income