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withholding Local taxes

Posted By suzyq6651 3 months ago

I am in Illinois and I have an employee that lives in Indiana, but works for us in Illinois most of the time, so he is set up in our Payroll that his wages get applied to IL but when is is not coded to the Indiana job we have his set up is still taking out the Local Tax only?? is this correct? since we cannot predict if he will be working at our Indiana job over 30 hours this year (job almost complete) and at the end of year for 2024 the employee can file for a refund for these taxes?

0 Rhonda V 3 months ago

I suggest you consult a tax professional, which I am not. But from reading the following information, it sounds like INDIANA RESIDENTS that work in Illinois are subject to Indiana's local taxes on all wages they earn whether in Illinois or Indiana (so his set-up sounds correct). The local tax credit he may apply for at the end of 2024 would only be available for local taxes he paid to another locality. And I believe the 30-hour test applies only to employees that live outside of Indiana but work inside Indiana (non-residents) so it would be employees that live in Illinois that are working in Indiana.

https://www.in.gov/dor/files/ib32.pdf

https://www.in.gov/dor/files/ib28.pdf

https://www.in.gov/dor/legal-resources/tax-library/information-bulletins/income-tax-information-bulletins/

https://www.in.gov/dor/files/dn01.pdf

I hope this helps, but I'd still confirm with a tax professional...
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