Right now the rules governing the taxation of wages of non-residents (e.g. if someone lives in Wisconsin but works for a time in Illinois) vary state to state. Some states tax wages from day one while others have higher thresholds before taxation is incurred.
A new bill introduced into the House, HR1864, the Mobile Workforce State Income Tax Simplification Act of 2011, would create uniform rules to apply in all fifty states. HR 1864 is identical to a bill introduced in 2009 that never came to a vote. It would provide that states could tax wages after an employee had worked for than 30 days within a state during a year. Once an employee passes that 30 day mark, all his or her wages going back to day one could be taxed.
The bill provides some exceptions for professional athletes, entertainers, and for certain public officials. The bill seems to imply that wages earned in a state in which one is not a resident, after the 30 day marker, would be eligible for taxation in both the state of employment and the state of residency. If this would constitute double taxation and if it might be avoided by a tax credit or other means is at present not clear.
For more information on non resident taxation, for other income tax questions and issues, or for help with other tax related legal concerns, contact the Chicago tax attorneys at Horowitz & Weinstein.