Withholding in wrong state

snoe · #1 Mar 19, 2009, 05:21 PM

I am resident in Illinois, and have a winter home in Arizona. More than 1/2 of the year is spent in Illinois. Some W2 income was incorrectly designated as AZ income and taxes were withheld.

How do I correctly include this income on my IL return?

How do I recover the incorrect AZ withholding?

I am using TurboTax to prepare my returns, but it insists on taking the W2 information literally and incorrectly determining taxes due in the two states.

ebaines · Mar 20, 2009, 11:33 AM

Hello snoe. Are you saying that while you were living and working in IL your employer incorrectly withhled AZ tax? Remember that if you did any work in AZ you would indeed owe AZ income tax.

OK, assuming that indeed it was an error - you should complete an AZ income tax form as a non-resident, in which you AZ taxable income of $0. This will get you a full refund from AZ. You also fill out IL income tax as usual. Since your employer didn't withhold IL tax as they should have, you may end up owing IL a fair amount of money. There is no way to simply transfer the money directly from AZ to IL.



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