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1099 Contractor in Illinois with a Minnesota Client: Where Do You File?

Home state, plus the client state if you work thereNo withholding — 1099

Answer

Illinois taxes all of it; Minnesota taxes only what you earn on its soil. Nothing is withheld from a 1099, so you pay Illinois quarterly. A Minnesota client alone creates no Minnesota filing obligation — performing services inside Minnesota does, and Illinois then credits that tax.

Last verified

Reciprocity agreements are the first thing contractors ask about and the first thing that does not apply to them. Every agreement in the country is a wage-withholding arrangement, and a 1099 has no withholding to switch off.

Minnesota publishes no de minimis day count or dollar floor for nonresidents. Any Minnesota-source wage income above the state's general filing threshold requires a nonresident return, and that threshold is reset each year — check the current figure on the Minnesota Department of Revenue nonresident instructions before filing.

What you file

  1. 1Quarterly estimated payments · Illinois

    Make quarterly estimated payments to Illinois Department of Revenue on your full self-employment income — nothing is withheld from a 1099.

  2. 2Nonresident return · MinnesotaForm M1 with Schedule M1NR

    File a Minnesota nonresident return only if you performed services inside Minnesota. Minnesota publishes no de minimis day count or dollar floor for nonresidents. Any Minnesota-source wage income above the state's general filing threshold requires a nonresident return, and that threshold is reset each year — check the current figure on the Minnesota Department of Revenue nonresident instructions before filing.

  3. 3Resident return · IllinoisSchedule CR

    File the Illinois resident return last and claim the credit for any tax paid to Minnesota.

The two states, side by side

 IllinoisMinnesota
Taxes wagesYes — flatYes — graduated
Reciprocity partners4 (Form IL-W-5-NR)2 (Form MWR)
Convenience ruleNoNo
Nonresident returnForm IL-1040 with Schedule NRForm M1 with Schedule M1NR
Credit for other-state taxSchedule CRSchedule M1CR
Nonresident safe harbour30 daysNone published
Local income taxNoNo
Revenue departmentIllinois Department of RevenueMinnesota Department of Revenue
Last verified

The other direction

Reversing the commute does not always reverse the answer. Living in Minnesota and working in Illinois gives:Home state, plus the client state if you work there.

Minnesota to Illinois →

Same two states, different situation

The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.

Other Illinois pairs

Questions people actually ask

I live in Illinois and my client is in Minnesota. Do I have to file a Minnesota tax return?

Illinois taxes all of it; Minnesota taxes only what you earn on its soil. Nothing is withheld from a 1099, so you pay Illinois quarterly. A Minnesota client alone creates no Minnesota filing obligation — performing services inside Minnesota does, and Illinois then credits that tax.

Do reciprocity agreements help a 1099 contractor?

No. Every state reciprocity agreement in the country is an arrangement about wage withholding between two revenue departments, and a 1099 has no withholding to switch off. Whether Illinois and Minnesota hold an agreement makes no difference to a self-employed filer — sourcing rules decide the answer instead.

How current is this?

The Illinois and Minnesota rules on this page were last checked against Illinois Department of Revenue and Minnesota Department of Revenue on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.

Sources

Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.