Illinois' income tax is imposed on every individual, corporation, trust
and estate earning or receiving income in the state. The tax is a flat 3
percent of a taxpayer's federal adjusted gross income.<<
This makes it sound like you pay more than just the tax on your Illinois
W2-G if you're an non-resident.
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Let's see if I can answer two questions with one post here ...
1st, Illinois income tax IS imposed on Adjusted Gross Income BUT,
there are adjustements to that on the Illinois returns.
Question 1: about the filing on the $97K win, back then they didn't
directly use the adjusted gross income but actually had a section for
income to be calculated. Now they start with AGI and allow for certain
deductions. It was an apparant loophole which has since been closed.
Question 2 Out of state people file a special "NR", for Non-Resident,
form the goal is to tax income earned in Illinois for them. It does not
include winnings in other states. (Residents pay for income earned
anywhere in the world)