Iowa has a reciprocal agreement with Illinois. This means the wages and salaries earned by the taxpayer should be taxed only in the taxpayer's state of residence.
If the employer accidentally withheld Illinois taxes from the taxpayers pay, file a nonresident Illinois return to claim a refund of the taxes withheld.
- Complete the Iowa Resident Return
- Add or Edit Illinois Nonresident Return
- Net Income
- State Where You Filed a tax Return - Indicate taxpayer was a resident of Iowa
- Illinois Income
- Wages, Salaries, tips etc
- Adjustments to State Wages - Enter wages as a negative number
The Illinois return must be printed, signed and mailed to the state. Include a note explaining the taxpayer is a resident of a reciprocal state, a copy of the Iowa return and copies of the Illinois W-2(s) showing the income.
To claim exempt from future Illinois withholdings, file form IL-W-5-NR with the taxpayers employer.
Additional Information:
Iowa Resident Return Instructions