CPE Recommendations for IL?

@CathysTaxes - did you ever get to the bottom of this IL issue? Do they really have the right to double tax the same income as another state taxes, and not give a credit (partial due to difference in tax rates) for the tax paid to the other state? I have a client who got the dreaded letter from the ILDOR disallowing the credit for tax paid to another state, basically saying they tax all IL income because his home office is in IL, even though he travels to another state to do the majority of the work and pays tax in that other state.

I'm still waiting to hear from the client to see if our challenge was accepted. The employer submitted a letter (on their letterhead) that specifically stated how much of the money was sourced to Illinois. The employer has since changed payroll providers and 2016 W2s did not need the letter.

Thanks. I appreciate the additional info. Client is in contact with his employer and we'll take the same approach assuming they will cooperate.

Out of curiosity, does the new payroll provider list IL income on the W-2 as the actual amount that was sourced to IL, rather than the full amount earned for the year? Trying to figure out if this is a W-2 / payroll issue, or if IL truly claims to have the right to double tax income that was already taxed by another state.

Thanks. I appreciate the additional info. Client is in contact with his employer and we'll take the same approach assuming they will cooperate.

Out of curiosity, does the new payroll provider list IL income on the W-2 as the actual amount that was sourced to IL, rather than the full amount earned for the year? Trying to figure out if this is a W-2 / payroll issue, or if IL truly claims to have the right to double tax income that was already taxed by another state.

This was the W2 for 2016

Federal Wages 101,155
IL Wages 78,530
IN Wages 14,847
KS Wages 907
MN Wages 3,764
OH Wages 3,106

WI Wages 2,661 (a reciprocal state, IL Wages includes this and WI tax was fully refunded. I had client fill out an exempt from WI tax form)

Cathy - was your client's challenge accepted? I'm asking because a friend of mine just took a new job with a Kansas company. She started a couple of months ago so she doesn't have any immediate filing problems, but was not expecting KS withholding to be taken out since she lives in Illinois. Its putting her in a bit of a bind. Any thoughts on what she should do? Thanks!

For one year, I sent an amended return with a letter from the employer on their letterhead and have not heard from them. The past two years, the employer changed payroll services and I have able to efile Illinois now. They have not received any notices on the returns for the last two years.

My friend is working about 4 days a month in Kansas, the rest in Illinois. Should her KS withholding be based on the 4 days a month she works there? And should the Illinois withholding be based on only the days she works in Illinois? I'm guessing it should but just want to be sure. Thanks

Where does she live? Each state will give her credit for taxes paid in the other. She would have to fill out the questionnaire on ILW-4 and the Kansas version to determine withholding.

She lives in Illinois (always has). I’m confused about the credit part because in post #7 & #8 you seemed to say the credit would be denied.

The issues I had in the past is because client's employer's payroll service wasn't preparing the state portion of the W-2s correctly. They changed payroll providers. Once you prepare the Kansas return, you deduct that tax on the Credit Paid to Other States form.

Ok, then the state portions should be somewhat like what you had in post 23, correct? KS + IL = Fed....right?

Should be.