Illinois and Indiana Reciprocal Agreement: What You Need to Know

The states of Illinois and Indiana have entered into a reciprocal agreement, which affects both residents and non-residents who work in these states. Specifically, the agreement allows workers who live in one state and work in the other to avoid having to pay income taxes to both states.

Here are the key things you need to know about the Illinois and Indiana reciprocal agreement:

Who is eligible?

The agreement applies to residents of Illinois or Indiana who work in the other state. If you live in Illinois and work in Indiana, or vice versa, you may be eligible for the tax benefit.

What are the tax benefits?

Under the agreement, you will only have to pay income taxes to the state where you live. This means that you can avoid having to pay double taxes on the same income.

How do you claim the tax benefit?

To claim the tax benefit, you will need to fill out a nonresident tax return and indicate that you are claiming the reciprocal agreement. You will also need to provide proof of your residency, such as a driver’s license or voter registration card.

What if you work in multiple states?

If you work in multiple states, you will need to file a separate tax return for each state where you earned income. However, you can still claim the reciprocal agreement for any income earned in Illinois or Indiana.

Are there any exceptions to the agreement?

There are a few exceptions to the Illinois and Indiana reciprocal agreement. For example, if you are an Illinois resident who works for the federal government in Indiana, you will still have to pay taxes to both states.

What should you do if you have questions?

If you have questions about the Illinois and Indiana reciprocal agreement, you should consult a qualified tax professional. They can help you navigate the tax laws and make sure that you are taking advantage of all available tax benefits.

In conclusion, the Illinois and Indiana reciprocal agreement is a valuable tax benefit for those who live and work in these states. By avoiding double taxation, you can keep more of your hard-earned income in your pocket. If you think you may be eligible for this benefit, be sure to consult a tax professional to make sure that you are taking advantage of all available tax benefits.