How to file state taxes while W-2 from two states (different employer?

I am an Illinois resident and did not earn an income in the state of Illinois. Do I still pay taxes to Illinois, on the income I earned as a non-resident in California?

• I live in Illinois and for the tax year, I will be considered as a resident of the state of IL. I have not worked in IL in the tax year, earned no income and possess no W2 form from any employer in the state of IL. But during the summer of the same tax year, I worked in California for two months. I earned income in California, and I possess a W2 form which shows state taxes withheld for the state of CA. I will file as a non-resident in the state of CA for the income I earned by working in CA for those two months. I will also file the Federal Tax Returns form 104 But as a resident of IL, am I required to file tax returns in IL? If I do have to file taxes in IL, then as per my understanding, is the following process true? : I will fill the IL state return 1040 form, include a photocopy of the state W2 section from the CA employer with the IL-1040 state tax return form. Use the IL- Schedule-CR form - used for "taking a tax credit paid to other states" and attach with the regular IL-1040 state tax return form. In the Schedule-CR form, there are two Columns. Column A Line 1. for whole federal gross income and Column B Line 1. for the Non-Illinois portion of the federal gross income. These two amounts will be the same because the Non-Illinois portion is the only income I have earned while working in the state of CA. By following the instructions, it has be concluded that, the amount of tax I will have to pay to the state of CA on the income earned in CA, is lesser than the state of Illinois's flat 5% tax rate placed on the same amount of income. Based on the results of the Illinois additions and subtractions section of the Schedule-CR form, I will have to pay the state of IL, the difference amount. If the tax required to pay the state of CA on income I is X, and based on the 5% flat rate tax of IL on the same income I is Y, then i have to pay the state of IL, Y-X. I said "pay" because, unlike for the state of CA, no income tax was withheld in the state of IL. And being a resident and having an income in this tax year out of the state of IL, I am required to pay the state of IL some amount of tax on these out of state earnings, even though I have no earnings and have not worked in the state of IL. My questions is- do I file and pay OR do I file but not pay and my assumptions are wrong OR my assumptions are correct and I pay.

• Answer:

  Illinois taxes its residents on all income earned from any source, whether that be from inside the state or from outside the state. You are required to file an Illinois state tax return as a resident whenever you are required to file a Federal income tax return, or when your base income exceeds the Illinois exemption amount for your filing status. Your other assumptions are correct.