Illinois Resident Worked for Texas Company - Does he Pay 100% in Illinois

[Ephesians3-14]

I have a new client who was a full-year IL resident in 2021. He worked 128 days in TX during 2021. His 2021 W-2 is kind of strange because it shows that his wages were sourced 100% to Texas even though he was an IL resident during all 12 months of 2021. 

He filed his 2021 IL tax return showing that none of his wages were sourced to Illinois and so he paid no income tax. Today, he received a notice from the IL Dept. of Revenue indicating that he owes IL tax on his 2021 wages - notwithstanding the fact that the W-2 shows that the wages were TX-sourced.

I think the IL notice is right and that he owes the money because was an IL resident. He can claim a credit for the non-IL taxes paid (which is zero). The client disagrees with me but I think I'm right. Any support that I can provide to him as evidence that he owes 100% IL tax on those wages?

[IRonMaN]

Just tell him that I said you were correct ———-I’m sure that will get you off the hook. 😉

How detailed are the IL instructions?  Could be something helpful there or see if the state website has some helpful information on the subject.

[George4Tacks]

I would never disagree with IRonMaN!

Tell the client that they are allowed to take a tax credit on the Illinois tax return for ALL of the taxes that they paid Texas. 

P.S.

You done good the first time. 

P.P.S. If all else fails, share this link with the client https://letmegooglethat.com/?q=does+an+illinnois+resident+have+to+pay+taxes+on+income+earned+in+texa...

[dkh]

Doesn't it irritate you that this new client is disagreeing with you ?  He obviously doesn't know the answer or he wouldn't have received a notice from IL that he prepared his return incorrectly.   I'd send him on down the road.

See Page 4 of the Illinois Income tax instruction - Who is an Illinois Resident?  What is Illinois income?

[Just-Lisa-Now-]

You always pay tax on all income to your resident state. If the non resident state made you pay tax too, then one state will give credit for tax paid to the other (usually the resident state gives the credit, there are some exceptions)

[ljr]

He's a full year Illinois resident and it is taxable to them. Didn't pay Texas so no credit but he is not being double taxed. Maybe you should tell him he should MOVE to Texas if he doesn't want to pay state taxes. I too would tell him it is taxable and if he doesn't believe you hand him the notice back and say good luck. 

[PATAX]

@dkh always amazes me the clients that think they are Nikola Tesla juniors and no more than we do. One must ask the question: if they know so much why don't they do the tax return themselves?

[dkh]

Crazy thing  - Ephesians3-14 's  client DID do his tax return himself...came for help and didn't like the answer so thinks the answer is wrong.   

I have clients that do the return themselves at home, have me prepare their return and then tell me yep, I'm correct because I came up with the same result as them....smh