Unemployment Benefits Taxed by State

[astroantics]

Client lives in Illinois and works in Missouri. Drew unemployment from Missouri. Doesn't seem logical to me, but Illinois considers MO unemployment to be Illinois income. The credit schedule for out of state tax paid does not allow preparer to list any unemployment compensation as out of state income.
Resolved double taxation problem by not listing MO unemployment as Missouri source income. I've been looking for a citation addressing this situation, but no luck so far. Hoping the members can help.

John W. EA

[Gary2]

I don't think I've ever done a return for either state, so I'm hardly an expert. But from what I can tell, it's a symmetry around a peculiarity in IL law. Apparently IL doesn't tax IL unemployment insurance paid to non-residents, and hence doesn't allow out-of-state unemployment insurance received by IL residents to be excluded.

The unusual aspect isn't so much that they exclude out-of-state unemployment insurance from the credit calculation, but that they don't tax IL unemployment paid to out of state residents. In other cases where I've seen a state pay unemployment insurance to a non-resident, that state would always tax it.