You generally have to file an Illinois state income tax return if you were a resident of Illinois, either for the entire year or part of the year and your income is more than the exemption amount in Illinois. You also have to file a tax return in Illinois if you were not a resident but you had taxable income in Illinois. You should also file an Illinois tax return if Illinois state income tax was withheld from your pay. You may be due a refund.
If you meet the filing requirements and are a full-year resident, you file your Illinois state income tax return using Form IL-1040, which you can download from the Illinois Department of Revenue website. If you were a part-year resident, or a nonresident with income in Illinois, you must file Form IL-1040 and Schedule NR – Nonresident and Part-Year Resident Computation of Illinois Tax.
Your Illinois tax return is based on your federal adjusted gross income, so you need to complete your federal return before you can prepare your Illinois return. If you use tax software to prepare your tax returns you may be able to prepare both returns simultaneously. You should be aware of your potential deductions and credits and check your Illinois return before you send it in. And if you prepare your tax return on paper, you need to know which deductions and credits you can claim.
On your Illinois state income tax return, you start with your federal adjusted gross income and then make certain additions and subtractions to arrive at your Illinois base income. If you were a part year resident or a nonresident with income from Illinois, you have to complete Schedule NR to figure the Illinois portion of your federal adjusted gross income and your Illinois additions and subtractions. Once you have calculated your Illinois base income, you subtract your exemptions to determine your Illinois taxable income. The Illinois state income tax is 3% of your taxable income. You subtract any credits you qualify for, and the Illinois state income tax that was withheld from your pay and any estimated payments you made during the year. Then you can add any voluntary contributions you want to make. The end result is your refund or the amount you owe.
If you included an Illinois state income tax refund in your income on your federal tax return because you had claimed an itemized deduction for the taxes the prior year, you can subtract this refund on your Illinois state tax return.
If you contributed to a college savings plan, you can subtract up to $10,000 ($20,000 if married filing jointly) for contributions you made to the “Bright Start” and “Bright Directions” College Savings Pools, or to the “College Illinois” Prepaid Tuition Program.
If you bought a home under the Home Ownership Made Easy (HOPE) Program in Illinois, you can subtract all the interest income you earned over the life of your HOME account in the tax year you bought your home.
If you earned military pay from the U.S. Armed Forces or the National Guard of any state, and you had to include any of that income on your federal tax return, you can subtract that income on your Illinois tax return.
If you included interest income on U.S. government obligations such as savings bonds or Treasury bills on your federal return, you can subtract that income on your Illinois return. This includes distributions from mutual funds that invest exclusively in U.S. government obligations.
You can subtract the ridesharing money and benefits you received as a driver in a ridesharing arrangement using your car if that amount is included in your income.
You can subtract the contributions your employer made on your behalf to a Medical Care Savings Account and the interest earned on the account if that amount is included in your income.
There are other subtractions you may be entitled to claim on your Illinois state tax return in certain circumstances. You should see the instructions for Schedule M.
Credits
If you paid taxes to another state on income that is included in your Illinois tax return you can claim a credit for those taxes on your Illinois return. You need to complete Schedule CR and attach copies of the tax returns you filed in other states.
If you paid property taxes, you can claim a credit on your Illinois income tax return for 5% of the property taxes you paid on your principal residence. You need to complete Schedule ICR to claim this credit.
If you are the parent or legal guardian of a full-time student under age 25, both you and the student are Illinois residents, and you paid more than $250 in expenses for the student to attend kindergarten through twelfth grade in a public or nonpublic school in Illinois, you can claim a credit on your Illinois tax return. The credit is 25% of your expenses in excess of $250, up to a maximum credit of $500. Expenses that qualify for the credit include tuition, fees and books. To claim the credit you need to complete Schedule ICR.
If you qualify for the federal earned income credit, you also qualify for the Illinois earned income credit. The Illinois credit is 5% of the federal credit. You need to complete Schedule ICR.
There are various income tax subtractions and credits available for businesses in Illinois, including enterprise or redevelopment zone subtractions, youth vocational program credit, dependent care assistance program credit, jobs tax credit, a credit for affordable housing donations, and a credit for research and development costs. These credits are claimed on Schedule 1299-C.
Sources:
Form IL-1040 Instructions – Illinois Department of Revenue
