You will need to file a nonresident Illinois state income tax return to get a refund of all the IL state income taxes withheld for the tax year in question. Yes, you have to file two state income tax returns: Wisconsin has a state reciprocal agreements with Illinois so you don't pay sate income taxes to Illinois.A federal court in the Northern District of Illinois has permanently enjoined two Chicagoarea tax return preparers from preparing returns for others. You must file Form IL-W-4 when Illinois. Income Tax is required to be withheld from compensation that you receive as an em- ployee. When we hired our employee, she used an IL address and just amended it after finding out we needed to withhold IL state taxes. Form IL-W-5-NR can be filled out in the Payroll Office, 101 Hovey Hall, to claim exemption from withholding of Illinois income tax. This is necessary to fill out the "Previously reported" section of your amended return. A Kansas employer must withhold Kansas tax if its Kansas resident employee performs services in a state with an income tax rate that is lower than Kansas's. Gov to obtain this form.