If you are a nonresident, you must file Form IL-1040 and Schedule NR if:
you earned enough taxable income from Illinois sources to have a tax liability (i.e., your Illinois base income from Schedule NR, Step 5, Line 46, is greater than your Illinois exemption allowance on Schedule NR, Step 5, Line 50), or you want a refund of any Illinois Income Tax withheld in error. You must attach a letter of explanation from your employer.

NOTE: If you are a nonresident and your only income in Illinois is from one or more partnerships, S corporations, or trusts that either filed a Form IL-1023-C, Composite Income and Replacement Tax
Return, on your behalf or withheld enough Illinois Income Tax to pay your liability, you are not required to file a Form IL-1040.


If you are an Iowa, Kentucky, Michigan, or Wisconsin resident who worked in Illinois, you must file Form IL-1040 and Schedule NR if:
you received income in Illinois from sources other than wages, salaries, tips, and commissions, or
you want a refund of any Illinois Income Tax withheld.

If you received wages, salaries, tips, and commissions from Illinois employers, you are not required to pay Illinois Income Tax on this income. This is based on reciprocal agreements between Illinois and these states.

The reciprocal agreements do not apply to any other income you might have received, such as Illinois  lottery winnings.

Line 32 Credit for Net Tax Paid to Another State
If you paid tax both to Wisconsin and another state on the same income, you may be able to claim a credit for such tax. Read the Schedule OS instructions to determine if you may claim the credit. If you qualify for the credit, complete Schedule OS. Fill in the amount of your credit from Schedule OS on line 32. Be sure to enter in the brackets on line 32 the 2‑letter postal abbreviation for the other state to which you paid tax. If you paid tax to more than one other state, fill in the number “99” in the brackets. See Schedule OS for other situations where additional code numbers may be required. Enclose Schedule OS and copies of the other state’s return.

CAUTION Credit cannot be claimed for taxes paid to Illinois, Indiana, Kentucky, or Michigan on personal service income (such as wages, salaries, tips, commissions, bonuses, etc.) you received from working in one of those states. Instead, file a return with that state to get a refund of any tax withheld from your wages. Be sure to explain on that state’s return that you were a Wisconsin resident when earning the wages in that state. See Publication 121, Reciprocity, for more information.

Line 5 - Credit for taxes paid to other states
If you received income from another state while you were an Indiana
resident, you must report that income on your Indiana income tax return.
You may be able to take a credit for taxes paid to another state. If
you had income from another state, and had to pay taxes to that state,
read the following instructions carefully.
If you were an Indiana resident during 2012 and had income from any
of the states listed in Group A below, you should first find out what the
other state’s rules are concerning the taxation of your income.

Group A
No Agreement (Credit taken on resident return)
[SNIP]
Illinois
[SNIP]
*(Capital gain, interest, and dividends only.)

Group A Worksheet
A. Enter the amount of tax paid to the
other state. (This does not mean the
tax withheld from your wages, but
the actual tax figured on the other
state’s return) ..................................................A_ ___________
B. Multiply the amount of income from the
other state (that is subject to Indiana tax)
by 3.4% (.034) ................................................B_ ___________
C. Enter the amount of Indiana state income
tax shown on Form IT-40 line 8 ..................C_ ___________
The lesser of the amounts on A, B or C is your allowable credit for
taxes paid to other states.

You must enclose a copy of the income tax return (not just the W-2
forms) you filed with the other state to claim this credit. If the other
state’s return is not enclosed, the credit will not be allowed. Likewise,
if you have a foreign tax credit, complete the Group A Worksheet and
federal Form 1116. If Form 1116 was not required, enclose Forms
1099-INT and/or 1099-DIV (or a substitute statement) to verify the
foreign tax and amount of income being taxed.

Example. Ryan reported $10,000 Illinois-source wage income on the
Illinois nonresident individual income tax return, and paid $300 tax
to Illinois on that income. His Indiana state tax liability from line 8 of
Form IT-40 is $870.

IT-40 Booklet 2012 Page 45
He will enter the following information on the Group A Worksheet.
A. $300 (tax paid to Illinois)
B. $340 ($10,000 x .034, tax due to Indiana)
C. $870 (Form IT-40 line 8)
Ryan’s credit is $300, which is the lesser of A, B and C.