I’m pretty sure I have it correct, but wanted to see if anyone here lives in Illinois and works in Wisconsin. The way I understand it, there is a reciprocity agreement between the two states that a resident of one state only has to pay income taxes for their state of residency instead of taxes for the state that the job is held in.

So in this scenario the Illinois resident that works in Wisconsin only pays Illinois state income taxes. Therefore an Illinois W-4 needs to be filled out along with that form in Wisconsin that exempts the Illinois resident from having to pay Wisconsin taxes.

Am I correct?

You are correct for Iowa and IL, I can't speak for WI.

Until retirement three years ago I lived in IA but worked across the river in IL, I paid nothing to IL and did not file there. I do not recall our tax guy ever sending anything to IL.

Yes. Your employer should withhold and pay that to Illinois and not withhold anything from Wisconsin. Link below sums it up.

https://www2.illinois.gov/rev/...nswers/Pages/12.aspx

I live in Wis. and worked in IL. USED to be you paid taxes to the state you reside in.

A friend lives in Wisconsin and works in Illinois. He pays taxes to Wisconsin not Illinois.

quote:

Originally posted by Jamess1:
Yes. Your employer should withhold and pay that to Illinois and not withhold anything from Wisconsin. Link below sums it up.

https://www2.illinois.gov/rev/...nswers/Pages/12.aspx

Thanks for that link. I’ll use it if needed. The HR lady I’ve been talking to at my new company agrees with me and they are just waiting on the payroll company to figure out what is needed. Their system is supposed to have all of the reciprocity rules between states but for some reason it’s assigning the Wisconsin W-4 for me. They’re trying to get everything sorted out.

Unfortunately, Missouri has NO reciprocal agreement with Illinois. My daughter lived in Missouri and worked in Illinois a couple of summers ago.


As a nonresident you are required to file Form IL-1040, Individual Income Tax Return, and Schedule NR if

you earned enough taxable income from Illinois sources to have a tax liability (i.e., your Illinois base income from Schedule NR is greater than your Illinois exemption allowance on Schedule NR), or
you want a refund of any Illinois Income Tax withheld in error. If your employer withheld Illinois tax from your pay in error, you must attach Form W-2c, Corrected Wage and Tax Statement, or a letter from your employer, on company letterhead, to your Form IL-1040 to verify that Illinois tax was withheld in error.

If you live in Iowa, Kentucky, Michigan or Wisconsin, you must file Form IL-1040 and Schedule NR if

you received income in Illinois from sources other than wages, salaries, tips, and commissions, or
you want a refund of any Illinois Income Tax withheld in error. If your employer withheld Illinois tax from your pay in error, you must attach Form W-2c, Corrected Wage and Tax Statement, or a letter from your employer, on company letterhead, to your Form IL-1040 to verify that Illinois tax was withheld in error.

If you received wages, salaries, tips, and commissions from Illinois employers, you are not required to pay Illinois Income Tax on this income. This is based on reciprocal agreements between Illinois and these states. If your employer is withholding Illinois tax, you should fill out a Form IL-W-5-NR, Employee's Statement of Nonresidence in Illinois, and give it to your employer so they will stop the withholding. You will need to file an Illinois return to get any withholding refunded to you.

https://www2.illinois.gov/rev/...nswers/Pages/10.aspx

^^^^^^
Major league baseball players have it worse. That keeps a lot of CPAs in business since they often owe tax in a myriad of states. Luckily they can afford top quality help.