Schedule NR IL-1040 Instructions

              Illinois Department of Revenue
Schedule NR IL-1040 Instructions
General Information
What if I was an Illinois resident for part of the tax year?
If you were a resident of Illinois during part of the tax year, you
are considered a part-year resident and must complete and file
Form IL-1040 and Schedule NR if you
earned or received income from any source while you were
an Illinois resident,
earned or received income from Illinois sources while you were
not an Illinois resident, or
are entitled to receive a refund of Illinois Income Tax.
As a part-year resident, the rules you use to determine Illinois income
and tax depend on whether or not you were a resident of Illinois
when you earned the income.
If you were a resident of Illinois when you received the income, you
will (within certain limitations) be taxed on 100 percent of the income
you received while you were a resident, regardless of the source.
If you were a nonresident of Illinois when you received the income,
you will be taxed only on the income you received from Illinois
sources.
When completing Schedule NR, you must add the income you
received during the time you were a resident, and the Illinois income
you received during the time you were not a resident. Refer to the
step-by-step instructions for part-year residents.
Use the same method of reporting that you use for filing your federal
return. Report your income when you receive it and your deductions
when they are paid. However, if you use the accrual method,
“received” means “earned or received.” Income that you received
through partnerships, S corporations, trusts, or estates is considered
received on the last day of the business’ tax year.
What if I received income from a business or a
farm during the tax year?
If, while you were a nonresident of Illinois, you received
business income earned both inside and outside Illinois, or
farm income earned both inside and outside Illinois,
you must complete the Business or Farm Income Apportionment
Formula (IAF) Worksheet on Page 10. The IAF Worksheet allows you
to figure the Illinois portion of your business or farm income. Be sure
to keep a copy of this worksheet with your income tax records.
What is business income?
Business income means income you earned or received from any
activity that you took part in during the regular course of your trade or
business. It does not include wages or other compensation you
received as an employee. It includes all income (other than
compensation) that may be apportioned by formula among the states
in which you are doing business without violating the Constitution of
the United States. All income (other than compensation) you received
is business income unless it is clearly attributable to only one state
and is earned or received through activities totally unrelated to any
business you are conducting in more than one state. Business
income is net of all deductions attributable to that income.
What is the purpose of Schedule NR?
Schedule NR, Nonresident and Part-Year Resident Computation
of Illinois Tax, allows part-year or nonresidents of Illinois to
determine the income that is taxed by Illinois during the tax
year and to figure Illinois Income Tax.
Schedule NR to Form IL-1040, Individual Income Tax Return.
What if I was a nonresident of Illinois for the entire tax year?
If you were a nonresident of Illinois during the entire tax year,
you must complete and file Form IL-1040 and Schedule NR if
you
earned enough taxable income from Illinois sources to have a
tax liability (i.e., your Illinois base income from Schedule NR is
greater than your Illinois exemption allowance on Schedule NR),
or
are entitled to a refund of Illinois Income Tax that was withheld
from your pay in error.
If you were not a resident of Iowa, Kentucky, Michigan, or
Wisconsin, you must attach a statement from your employer
indicating that your wages were not earned in Illinois and Illinois tax
was withheld in error.
What if I was a resident of a reciprocal state for the tax year?
If you were an Iowa, Kentucky, Michigan, or Wisconsin resident,
and earned income in Illinois, you are exempt from paying Illinois
Income Tax on income you earned from salaries, wages, tips,
and other employee compensation. You are exempt because
Illinois has a reciprocal agreement with these states. You must
file Form IL-W-5-NR, Employee’s Statement of Nonresidence in
Illinois, with your employer to be entitled to this exemption. If you
are a resident of a reciprocal state, you do not have to file
Form IL-1040 and Schedule NR unless you
earned income in Illinois from sources other than wages
paid to you as an employee, or
had Illinois Income Tax withheld from your pay in error.
What if I was a nonresident professional athlete?
All nonresident members of a professional athletic team are
subject to Illinois income tax on the Illinois portion of their total
compensation for services performed as a member of such a
team. For more information, see the nonresident step by step
instructions for Line 7, or refer to “What if I need
assistance, forms, or schedules?” for our telephone numbers.
IL-1040 Schedule NR Instructions (R-12/05) Page 1 of 10