Is unemployment benefits taxable income in IL where the taxpayer lives, or IN where it came from?

[Laaccy1]

I have a taxpayer that lives in Illinois but works in Indiana.  Would unemployment benefits paid by Indiana be considered Indiana income or Illinois income?

[dkh]

Indiana and Illinois are not reciprocal states.   Therefore, income earned in Indiana is taxable as non-resident income for Indiana       this IDR Bulletin  will help  https://www.in.gov/dor/files/ib28.pdf

However....... Indiana General Assembly will discussing and deciding sometime yet this month whether to tax unemployment income.       this will help  https://www.in.gov/dor/files/DOR-Rescue-Plan-Act-Guidance.pdf

[BobKamman]

No mention of unemployment in that 2016 Indiana bulletin.  It's an interesting question.  I think the same or similar was asked here a while ago, with no answer.  Thousands of people are collecting unemployment from one state -- at least they are collecting the federally-funded payments -- while residing in another.  I haven't seen anything that discusses the law of state taxation on such benefits.  

[dkh · Accepted solution]

This does specifically address the unemployment  - -- see page 2

https://www.in.gov/dor/files/dor-tax_season_faqs_2020.pdf

And Bulletin #28 dated 2016 still applies today - it is the current version available at IDOR