A part-year resident may only take a credit on income earned while a resident of Illinois if the same income is taxed by both Illinois and another state.

A nonresident may not take a credit on Illinois Schedule CR.

What taxes qualify for the credit?
Taxes that qualify for the credit are income taxes you paid to another state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States, or to a political subdivision (e.g., county, city, local) of one of these jurisdictions. No credit is allowed for taxes paid to the federal government or to foreign countries or to their political subdivisions.

To qualify for this credit, a tax must be deductible as state and local income taxes paid on your federal Schedule A, Itemized Deductions, whether or not you actually claimed the deduction. An alternative minimum tax measured by income may qualify. The Michigan Single Business Tax is not an income tax and does not qualify for the credit.

No credit is allowed for interest or penalties imposed on you, even in connection with an income tax. You may claim the credit for income taxes paid on your behalf (e.g., by withholding or with a composite return), but only if you are the person legally liable for the tax (i.e., if you would be required to pay the tax if it had not been paid on your behalf).

What if I earn income in Iowa, Kentucky, Michigan, or Wisconsin?
If you earned wages, salaries, tips, or other employee compensation from an employer in Iowa, Kentucky, Michigan, or Wisconsin while you were a resident of Illinois, you are covered by a reciprocal agreement between that state and Illinois and are not taxed by that state on your compensation. However, you may be taxed on other income.

If your employer withheld taxes or you paid tax to these states on your compensation, you must claim a refund from that state. You may not claim a credit on Schedule CR for that tax. You must file the appropriate forms with that state to receive a refund of taxes withheld in error.

The reciprocal agreements do not prohibit subdivisions of these states from imposing a tax on your compensation. If you were subject to tax by, for example, a city in Kentucky while you were an Illinois resident, you may claim a credit for that local tax. In addition, because of differences in state laws, you may be considered a resident by one of these states and required to pay their income taxes, even though you are an Illinois resident under Illinois law.

Back