IL assistance, please

[Possi]

What form do I use for IL where the state withholding was in error?

For VA it is the 763S, but I can't find one for IL and I can't get them on the phone.

[Koss]

Illinois Withholding

I don't think there is a special form.

What are you trying to accomplish?

Are you saying the employer withheld Illinois tax, but the employee did not work or live in Illinois at any time during the tax year, has no Illinois tax liability, and has no obligation to file an Illinois return?

If that is the case, then just file a complete Illinois return, indicating that the taxpayer is a nonresident. You'll have to fill in the federal AGI, but the Illinois income will be zero, and the Illinois tax will be zero, so the outcome should be a full refund of all tax withheld.

You may need to add a note to the effect that the tax was withheld in error, and that the taxpayer did not live or work in Illinois at any time during 2011.

BMK

[BOB W]

You need to follow whatever in on the W-2. The employee has to work things out with employer. NOT your problem.

If withholding was withheld in a state that he did not work, you need to file the return with the state to get the refund.

[Possi]

Withheld in error

I thought all states had a special form. VA and MD both do. Oh well, I'll do the non-resident.
She is a military spouse who qualifies to claim PA as her home state of record, and pays tax to PA.
I have a lot of military tax returns...
Thanks for your help~

[BOB W]

Most employers do not have the ability to withhold other state's taxes, especially if a small employer. Just file the "Non Resident" return and hope for the best, because she did live and work in IL.You may have to explain why she is taxed only in PA while living and working in IL.

[Gary2]

I thought all states had a special form. VA and MD both do. Oh well, I'll do the non-resident.
She is a military spouse who qualifies to claim PA as her home state of record, and pays tax to PA.
I have a lot of military tax returns...

I've never heard of a state having a special form to recover withholding for the case where an employer withheld by mistake. The last time I asked a state (CA), they said to file a paper return showing no CA income, with the W-2 and a statement saying that the employer withheld for CA by mistake, and that the employee never set foot in CA during the year. However, there may be special procedures for recoveries by military spouses, which you'll have to look up state by state.

For example, MA doesn't use a special form, but does require that the military spouse mail in (no efile) a standard non-resident return, with MSRRA handwritten across the top, and four additional items of documentation attached (ID, orders, etc.).

Also, many states do have a special withholding form (equivalent to the W-4) for military spouses. So, for example, in MA, instead of filing an M-4 (the standard form for adjusting MA withholding), a military spouse must file an M-4-MS. These would be forms filed with the employer, not the state.

[Possi]

Military Spouses

I am in a high-military location and I have a lot of spouses who claim their military spouse's home state of record. They qualify for the state tax exemption, so oftentimes the employer withholds for the state that they are working in, but they really do not owe the state any money.

Yes, she worked in that state.

No, she is not liable for state taxes.

In these cases, we need to get that withholding back.

Both VA and MD have special forms. Lots of people in my area live and work among VA, MD and NC, and it can get very confusing. But in these cases with the new military exemption, you'd think the states would all get it together and have a way for us to get that withholding back.

[BOB W]

How about having employers NOT withhold State taxes but withhold Federal. Employees should say they exempt from state taxes when filling out W-4 type forms for state.

Of course a high earning employee would still be require to file but pay no taxes.

[Possi]

Yep!

ya THINK??

They should, they don't, I mop it up...

[Lion]

Educate

Yes, educate your military spouses, just like we educate the kids of our clients, to use whatever line or box on the state w/h certificate is needed to NOT have state income tax withheld when there will be no liability. Otherwise, we have to file a state return to get it back for them. And, clients don't see our value for doing that. So, educate them upfront or as soon as you come in contact with them. If you're in a high military area, can you speak at a wive's club or put an information piece in the base newsletter or...?

[BOB W]

Don't forget about Estimated payments to home state, if needed.....................