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I am an Illinois resident and earn wages in another state. What should I do if the income tax rate in the state where I work is lower than the Illinois income tax rate?
You may take a credit for taxes paid to another state on the Schedule CR, Credit for Tax Paid to Other States. For the remaining Illinois income tax balance, you should make estimated tax payments using Form IL-1040-ES, Estimated Income Tax Payments for Individuals. If you have other Illinois withholding or a spouse who works in Illinois, you may wish to request additional withholding on Form IL-W-4, Employee’s and other Payee's Illinois Withholding Allowance Certificate and Instructions, in order to avoid paying estimated taxes. You may also request that your out-of-state employer voluntarily withhold Illinois taxes. If your employer withholds Illinois taxes for you when you did not work in Illinois, be sure your Form W-2 shows zero wages on the state wages line for Illinois.
Note: If you earned wages, salaries, tips, or other employee compensation from an employer in Iowa, Kentucky, Michigan, or Wisconsin while you were a resident of Illinois, you are covered by a reciprocal agreement between that state and Illinois and are not taxed by that state on your compensation. However, you are required to pay Illinois income tax. For more information, see the Schedule CR Instructions.