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working in Illinois, now living in Indiana - state tax withholding khannv 01-30-2007
Posted by khannv on January 30, 2007, 12:09 pm
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 I work in Illinois and was also living in Illinois till
September 2006 when I moved to Indiana. In all the paystubs
I received, the only state tax withheld was for Illinois. My
employer was in the process of applying for the Indiana
State Employer Number and finally got the number in the
first week of January 2007.

In the W-2 I received today, the state income tax amount
withheld is correct (for the entire year) but the only state
listed is Indiana. The Employer's state ID field is blank.
There is no Illinois state income tax shown.

Is this how it should be done? I would have guessed that as
I work in Illinois all my state taxes should be reported to
Illinois. Illinois does not have any reciprocal tax
arrangement with Indiana and I should have had to file with
Indiana to get credit for the taxes withheld by Illinois. I
would have also had to file as a part-year resident of
Illinois.

However, it looks like my tax filing has been simplified as
there is only Indiana listed on my W-2. Should I just file
my Indiana state tax as a full-year Indiana resident and
forget about Illinois? Note that my W-2 still lists my old
Illinois address and though 'IN' is listed in box 15 of the
W-2, the Employer's state ID field is blank. Is that a
problem? Should/Can I ask for a corrected W-2?

Any help or suggestions would be more than welcome!
Thanks.

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Posted by Katie on January 31, 2007, 8:59 pm
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 kha...@gmail.com wrote:

> I work in Illinois and was also living in Illinois till
> September 2006 when I moved to Indiana. In all the paystubs
> I received, the only state tax withheld was for Illinois. My
> employer was in the process of applying for the Indiana
> State Employer Number and finally got the number in the
> first week of January 2007.
>
> In the W-2 I received today, the state income tax amount
> withheld is correct (for the entire year) but the only state
> listed is Indiana. The Employer's state ID field is blank.
> There is no Illinois state income tax shown.
>
> Is this how it should be done? I would have guessed that as
> I work in Illinois all my state taxes should be reported to
> Illinois. Illinois does not have any reciprocal tax
> arrangement with Indiana and I should have had to file with
> Indiana to get credit for the taxes withheld by Illinois. I
> would have also had to file as a part-year resident of
> Illinois.
>
> However, it looks like my tax filing has been simplified as
> there is only Indiana listed on my W-2. Should I just file
> my Indiana state tax as a full-year Indiana resident and
> forget about Illinois? Note that my W-2 still lists my old
> Illinois address and though 'IN' is listed in box 15 of the
> W-2, the Employer's state ID field is blank. Is that a
> problem? Should/Can I ask for a corrected W-2?

You're right, Illinois and Indiana no longer have a
reciprocal agreement, so you are subject to Illinois tax on
your Illinois earnings even after you moved to Indiana.

You are a part-year resident of Illinois, and a part-year
resident of Indiana, and will file part-year resident
returns with both states for 2006. Assuming you moved to IN
on Sept. 1, you'll owe tax to Illinois on all of your
income, from all sources, from January through August, and
also on your Illinois earnings from September on. You'll
owe tax to Indiana on all of your income, from all sources,
from September on. Indiana will give you credit for the tax
you pay to Illinois on your Sept-Dec earnings (i.e., your
Illinois source income after you became an IN resident),
limited to the proportion of your Indiana tax liability that
relates to that income.

It sounds to me as though your W-2 is wrong. Surely the
employer withheld and paid over to Illinois the tax on all
of your earnings up to the time you moved to Indiana. If it
didn't have an Indiana employer number until January 2007,
it probably paid all of your withholding to Illinois and
none to Indiana. You should question the W-2. I bet
Illinois got all of the payments, and there is no mechanism
for moving withholding credits from one state to another.
Since Illinois is going to tax all of your earnings, you
want the withholding credit in Illinois, not in Indiana.

Katie in San Diego

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Cahn on February 19, 2007, 9:05 pm
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> You're right, Illinois and Indiana no longer have a
> reciprocal agreement, so you are subject to Illinois tax on
> your Illinois earnings even after you moved to Indiana.
>
> You are a part-year resident of Illinois, and a part-year
> resident of Indiana, and will file part-year resident
> returns with both states for 2006. Assuming you moved to IN
> on Sept. 1, you'll owe tax to Illinois on all of your
> income, from all sources, from January through August, and
> also on your Illinois earnings from September on. You'll
> owe tax to Indiana on all of your income, from all sources,
> from September on. Indiana will give you credit for the tax
> you pay to Illinois on your Sept-Dec earnings (i.e., your
> Illinois source income after you became an IN resident),
> limited to the proportion of your Indiana tax liability that
> relates to that income.
>
> It sounds to me as though your W-2 is wrong. Surely the
> employer withheld and paid over to Illinois the tax on all
> of your earnings up to the time you moved to Indiana. If it
> didn't have an Indiana employer number until January 2007,
> it probably paid all of your withholding to Illinois and
> none to Indiana. You should question the W-2. I bet
> Illinois got all of the payments, and there is no mechanism
> for moving withholding credits from one state to another.
> Since Illinois is going to tax all of your earnings, you
> want the withholding credit in Illinois, not in Indiana.

Thanks a lot Katie! You are absolutely correct and that was
my thinking too. I have since asked for and received a new
W-2 which shows all my withholdings to IL.

Thank you.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Katie on February 21, 2007, 7:07 pm
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>> You're right, Illinois and Indiana no longer have a
>> reciprocal agreement, so you are subject to Illinois tax on
>> your Illinois earnings even after you moved to Indiana.
>>
>> You are a part-year resident of Illinois, and a part-year
>> resident of Indiana, and will file part-year resident
>> returns with both states for 2006. Assuming you moved to IN
>> on Sept. 1, you'll owe tax to Illinois on all of your
>> income, from all sources, from January through August, and
>> also on your Illinois earnings from September on. You'll
>> owe tax to Indiana on all of your income, from all sources,
>> from September on. Indiana will give you credit for the tax
>> you pay to Illinois on your Sept-Dec earnings (i.e., your
>> Illinois source income after you became an IN resident),
>> limited to the proportion of your Indiana tax liability that
>> relates to that income.
>>
>> It sounds to me as though your W-2 is wrong. Surely the
>> employer withheld and paid over to Illinois the tax on all
>> of your earnings up to the time you moved to Indiana. If it
>> didn't have an Indiana employer number until January 2007,
>> it probably paid all of your withholding to Illinois and
>> none to Indiana. You should question the W-2. I bet
>> Illinois got all of the payments, and there is no mechanism
>> for moving withholding credits from one state to another.
>> Since Illinois is going to tax all of your earnings, you
>> want the withholding credit in Illinois, not in Indiana.

> Thanks a lot Katie! You are absolutely correct and that was
> my thinking too. I have since asked for and received a new
> W-2 which shows all my withholdings to IL.

Thanks for the feedback!

Katie

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by annegill on March 18, 2007, 2:37 am
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I have a VERY similar question to this I was hoping I could
get some advice on!

I moved from IL to AZ in April of 2006, but my employer was
not able to obtain a state employer ID number until November
2006. Consequently my W2s show that I made 5/6 of my wages
in Illinois and 1/6 of my wages in Arizona even though I
established residence in Arizona back in April.

Do I need to find a way to have my W2s corrected so that my
wages in Arizona are reflective of when I actually moved out
here, or are the W2s okay as they stand? I'm still working
for the same company, the only difference is that I live in
a new state. Right now my earnings look a bit strange
because 5/6 of my wages were made in 3-4 months while 1/6 of
my wages were made in 9 months.

If I need to obtain a corrected W2 what is the normal
procedure for doing that? Does my employer need to contact
the payroll company to get the state earnings reallocated
appropriately? I know that the credits will not change...
I assume my taxes would look like I would get back a
sizeable refund from Illinois and that I would owe Arizona a
fair bit if we were to work towards getting the W2s changed
and I'd like to keep things simple by just reporting the W2s
as they are today.

Are there any other special considerations I may have
overlooked?

What do you all think?

Thanks in advance for any advice you can offer.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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