If you live in Wisconsin and work in Illinois, you may have to file both a Wisconsin and an Illinois tax return. Generally, you must file an Illinois tax return if you had Illinois source income of $1,000 or more. Illinois source income includes wages, salaries, tips, and other compensation earned while working in Illinois, even if your employer is located outside of Illinois. However, you may not need to file an Illinois tax return if you meet certain exceptions, such as if you are a nonresident who earned less than $1,000 in Illinois, or if you are a full-year resident of Wisconsin who earned all of your income in Wisconsin. If you are unsure whether you need to file an Illinois tax return, you should consult with a tax professional.
Residency and Tax Domicile in Illinois and Wisconsin
Illinois Residence
* A person is considered an Illinois resident if they have established a permanent home in the state.
* Factors that determine residency include:
* Physical presence in Illinois
* Maintaining a permanent address
* Voting in Illinois elections
* Filing Illinois income taxes
Wisconsin Residence
* A person is considered a Wisconsin resident if they have established a permanent home in the state.
* Factors that determine residency include:
* Physical presence in Wisconsin
* Maintaining a permanent address
* Voting in Wisconsin elections
* Filing Wisconsin income taxes
Tax Filing Requirements
* If you are a resident of Wisconsin, you are generally not required to file an Illinois income tax return.
* However, there are some exceptions to this rule. For example, if you have Illinois source income, such as wages earned in Illinois, you may be required to file an Illinois return.
* If you are unsure whether you need to file an Illinois income tax return, you should consult with a tax professional.
Table Summarizing Filing Requirements for Wisconsin Residents
| Scenario | Illinois Tax Return Required? |
|---|---|
| Wisconsin resident with no Illinois source income | No |
| Wisconsin resident with Illinois source income | May be required to file |
Illinois Income Tax Filing Requirements for Nonresidents
Nonresidents of Illinois are generally required to file an Illinois income tax return if they have Illinois source income. Illinois source income includes income from employment, business activities, or investments located in Illinois.
The following table summarizes the Illinois income tax filing requirements for nonresidents:
| Filing Status | Income Threshold |
|---|---|
| Single | $1,000 or more |
| Married filing jointly | $2,000 or more |
| Married filing separately | $1,000 or more |
| Head of household | $1,000 or more |
Nonresidents who are required to file an Illinois income tax return must use Form IL-1040NR, Illinois Nonresident Income Tax Return. Form IL-1040NR is available on the Illinois Department of Revenue website.
Nonresidents who have Illinois source income and are not required to file an Illinois income tax return may still choose to file a return to claim a refund of any Illinois income tax withheld.
## Wisconsin Income Tax Filing Exemptions for Illinois Residents
Individuals who reside in Wisconsin but work in Illinois may be exempt from filing an Illinois state income tax return. Here are the exemptions based on Wisconsin’s reciprocity agreement with Illinois:
**Exemptions for Wisconsin Residents with Illinois Income:**
– **Exempt if income is below the Illinois income tax filing threshold:** The Illinois personal income tax filing threshold for 2023 is $1,050 for single filers and $2,100 for married couples filing jointly.
– **Exempt if income is under $1,000 from Illinois sources:** Individuals with Illinois income under $1,000 are exempt from filing an Illinois return.
– **Exempt if taxes withheld on Illinois income:** If all Illinois income tax has been withheld by employers, a return does not need to be filed (unless itemizing deductions).
– **Partial exemption for taxes withheld in Wisconsin:** If Illinois income is subject to Wisconsin withholding, but not all taxes have been withheld, the taxpayer may be entitled to a partial exemption.
It’s important to note that these exemptions only apply to Wisconsin residents who work in Illinois. Residents of other states may have different filing requirements.
**Filing if Above Exemption Thresholds:**
If Wisconsin residents exceed the above exemption thresholds, they will need to file an Illinois state income tax return. The following steps can assist in determining filing requirements:
- Calculate Illinois taxable income (gross income minus deductions and adjustments).
- Check if the taxable income exceeds the Illinois filing threshold.
- If taxable income is above the threshold, file an Illinois tax return.
**Table: Exemption Criteria for Wisconsin Residents**
| Criteria | Exempt | File Illinois Return |
|---|---|---|
| Illinois Income Below Filing Threshold | Yes | No |
| Illinois Income Under $1,000 | Yes | No |
| All Illinois Taxes Withheld | Yes (unless itemizing deductions) | No |
| Partial Wisconsin Withholding | Partial exemption | Yes |
| Illinois Taxable Income Exceeds Filing Threshold | No | Yes |
State Income Tax Reciprocity Agreements
Wisconsin and Illinois have a reciprocity agreement that eliminates the need to file tax returns in both states for residents who live in one state and work in the other. This agreement applies to both state income taxes and local income taxes.
The following table summarizes the reciprocity agreement between Wisconsin and Illinois:
| State of Residence | State of Work | File Tax Return |
|---|---|---|
| Wisconsin | Illinois | No |
| Illinois | Wisconsin | No |
If you live in Wisconsin and work in Illinois, you will only need to file a Wisconsin state income tax return. You will not need to file an Illinois state income tax return.
If you live in Illinois and work in Wisconsin, you will only need to file an Illinois state income tax return. You will not need to file a Wisconsin state income tax return.
This reciprocity agreement does not apply to local income taxes. If you live in one state and work in the other, you may still need to file a local income tax return in the state where you work.
For more information on the reciprocity agreement between Wisconsin and Illinois, please visit the following websites:
Thanks for sticking with me through this taxing topic! I hope this article has helped you navigate the tricky waters of Illinois tax filing. If you have any lingering questions, don’t hesitate to reach out. And remember, whether you’re a resident of the Land of Lincoln or the Badger State, it’s always a good idea to stay informed about your tax obligations. So keep an eye on this space for future updates and insights. See you next time, tax warriors!