ILLINOIS
separate property state

 

Military Income:   Exempt, see conditions below:

Military Filing Requirement:  Yes, if they want to maintain their Illinois residency.

Military Spouse Residency Relief Act:  In order to exempt spouse from Illinois tax withholding, nonresident military spouse must provide their employer with a completed Form IL-W-5-NR, Employees Statement of Nonresidence in Illinois

Forms Used:            

Filing Status:  Same as federal return.  BUT if one spouse is an Illinois resident while the other is a part-year or nonresident, client should file married filing separately.  If a joint return is filed, both spouses will be treated as residents and all income will be taxed (with the exception of military income).  CAUTION:  Once they choose to file jointly, they cannot change. 

Attach Copy of Federal Return:   Yes, if there are schedules.

Not Taxed: 

Other State Tax Credit:   Available.  Attach Illinois Form CR and copy of other state tax return.   

Reciprocity States  Iowa, Kentucky, Michigan, and Wisconsin.

Where to Mail:
Refunds: Tax Due:
Illinois Department of Revenue
Springfield, IL  62719-0001
Illinois Department of Revenue
Springfield, IL  62726-0001
Forms: 1-800-356-6302 General Information:  1-800-732-8866 or 217-782-3336
Other Info: E-File Helpdesk 1-866-440-8680
Illinois Department of Revenue
PO Box 19010
Springfield, IL  62794-9010
Website:  www.ILtax.com
E-filing Info:  Retain IL 8453 for 3 years.  The following CANNOT be filed electronically:
  • A married filing separate Illinois return when the federal was filed jointly.
  • Returns claiming credit for taxes paid to other states.
Tax Form Instructions:
Resident Instructions Non-Resident Instructions

Military Specific Instructions

 

Filing Status Scenarios

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer)
2.  Taxpayer and Spouse Different States of Residence
3.  Taxpayer and Spouse Non-Residents
4.  Taxpayer Non-Resident - Spouse Part-Year Resident
5.  Taxpayer Married or Single - Resident but Income from Other State
6.  Amended Return

 

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer) - Taxpayer and spouse are both Illinois residents, lived at their present location in Illinois all year, and one or both had income.

Main Info Screen.  If taxpayer wants to maintain Illinois residency they should file a resident return.

W-2 Form.  Illinois does not tax military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Illinois 1040 Form.  A joint resident Illinois income tax return is prepared.

Verify the military income is subtracted out on line 19 of Form IL M Pg 1.

Complete all other fields and forms with red or required information.

2.  Taxpayer and Spouse - Different States of Residence - Taxpayer or spouse is a resident of Illinois, while the other member is a resident of a different state.  A Illinois income tax return must be prepared due to the taxpayer or spouse having Illinois earned income.
Main Info Screen.  For this example, the taxpayer is a resident of Illinois while the spouse is a resident of North Dakota.

W-2 Form.  Illinois does not tax military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Illinois Form 1040.   If one spouse is an Illinois resident while the other is a part-year or nonresident, the client should file married filing separately.  If a joint return is filed, both spouses will be treated as residents and all income will be taxed (with the exception of military income).  A married filing separately, for the taxpayer in this case, Illinois income tax return should be prepared.

Verify the military income is subtracted out on line 19 of Form IL M Pg 1.

Complete all other fields and forms with red or required information.

3.  Taxpayer and Spouse Non-Residents - Taxpayer and spouse are residents of a different state.  The spouse and taxpayer must file a Illinois tax return due to one or both having Illinois earned income.
Main Info Screen.  If both members are residents of another state, the parties should file as nonresidents.  For this example, the taxpayer and spouse are both residents of Colorado but must file a Illinois income tax return because the spouse worked in Illinois.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Illinois Form 1040.   A married filing separately IL-1040 income tax return should be prepared for the spouse for the spouse as this results in the lowest tax..

Illinois Schedule NR - Nonresident and Part-Year Resident Tax Computation will be generated.  This form is used to subtract out the nonresident military spouse's income.  Check Military Spouse box. Verify the military spouse's income is removed from the Illinois column of Line 5 in Part II.

Review the remainder of the Illinois Schedule NR to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information. NOTE: A married filing separately return may not be e-filed and must be mailed in by the taxpayer.

4.  Taxpayer Non-Resident - Spouse Part-Year Resident - Taxpayer and spouse moved to or from Illinois during the tax year.  The taxpayer is a resident of a different state.  The Spouse is a part-year resident of Illinois.  The Spouse and taxpayer must file a Illinois tax return due to one or both of them having Illinois earned income and possibly income from another state.
Main Info Screen.  For this example, the taxpayer is in the military and a resident of Indiana.  The taxpayer and spouse moved from Illinois to North Dakota during the year.  The spouse was a resident of Illinois but now wishes to become a resident of North Dakota for tax purposes.  The spouse therefore was a part-year resident of both Illinois and North Dakota and must file a Illinois income tax return because the spouse worked in Illinois.

Part Year Resident States Worksheet.  Review form to ensure income is split correctly for the appropriate states.  

Illinois Form 1040.   A married filing separately part-year resident Illinois income tax return should be prepared on an IL-1040.

Illinois Schedule NR - Nonresident and Part-Year Resident Tax Computation will be generated.  This form is used to subtract out all the other-states (Indiana and North Dakota) income.  The residency status should be reviewed on the top of the form to ensure the boxes are checked correctly.  Enter the appropriate dates on Line 2, check the appropriate box, as required, on line 3 and fill in any state abbreviations on line 4.

Review the remainder of the Illinois 1040 form and Schedule NR to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

5.  Married or Single Military Resident of Illinois with Income from Another State  - Taxpayer is single.  The taxpayer must file a Illinois tax return due to him or her having Illinois earned income.
Main Info Screen.  For this example the taxpayer is a military member stationed in North Dakota but a resident of Illinois.  The taxpayer had a job in North Dakota therefore having North Dakota earned income.

W-2 Form.  Illinois does not tax military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Illinois 1040 Form.  A resident Illinois income tax return is prepared.  Illinois taxes residents on income from all sources, even income earned while living in another state (North Dakota as in this example).  The military income is exempted on line 6.

Verify the military income is subtracted out on line 22 of Form IL M Pg 2.

Illinois Schedule CR, Credit for Tax Paid to Other States.  Illinois Schedule CR must be added to the tax return and prepared to give a credit for taxes paid to another state (North Dakota). Link to the schedule from line 16 on page 1 of the IL-1040. You must complete the other states tax return first, then enter the amount of tax from the other states tax return.  This is not the amount the tax payer had withheld from his or her pay but the amount of tax imposed on them.  Part II lists the income earned in the other state.

Illinois Schedule CR, Credit for Tax Paid to Other States. LIst the actual amount of tax paid to the other state in Part VI. A copy of the other state's return must be attached to the Illinois return if not e-filed.

Complete all other fields and forms with red or required information.

6.  Amended Return  - An amended Illinois return must be filed because the taxpayer received new tax information after their Illinois return was filed.
Federal 1040X Form.  Before making any changes to the tax return add the US 1040X form to the tax return.  You must check the box under Income and Deductions to lock in the entries in Column A - Original amount or as previously adjusted.

Illinois 1040X - Amended Income Tax Return.  Add the Illinois 1040X Form to the return.  Answer the questions to explain the reason(s) for the amendment.  You must check the box to lock in the entries in Column A - As originally reported or as adjusted, before making any changes to the return. NOTE: If an amended federal return is also being performed you must wait until the Federal amendment is accepted before submitting the IL amendment.

Make whatever changes are required to the federal tax return.  For this example, a new W-2 was received.

Illinois 1040X - Amended Income Tax Return, Page 2.  Return to the Illinois 1040X form to determine if the taxpayer is receiving an additional refund or owes money.  Complete any other fields in red as necessary.

Amended returns can not be e-filed.  The taxpayer must mail the federal 1040X and any state amended returns if required to be filed.