The Illinois Department of Revenue (department) has issued an informational bulletin that summarizes income tax return changes for individuals and businesses for the 2020 filing season and 2021 withholding income tax filing season. The bulletin also provides a minor sales and use tax update.
The changes summarized in the bulletin include:
2020 Individual and Business Income Tax
- “MyTax” Illinois began accepting 2020 individual income tax returns on February 12, 2021;
- The personal exemption amount for individuals is $2,325 per person;
- The due date for filing 2020 individual tax returns and paying any tax due is April 15, 2021;
- The State of Illinois launched a new outreach initiative to increase earned income credit participation by targeting taxpayers who qualified but failed to claim the credit. For more information taxpayers may see Informational Bulletin FY 2021-04, Illinois Earned Income Tax Credit (EIC) Updates and New Letter.
- A checkbox for merged losses has been added to Form IL-1120, Corporation Income and Replacement Tax Return, Step 5, Line 38, Form IL-1120-ST, Small Business Corporation Replacement Tax Return, Step 7, Line 50, and Form IL-1065, Partnership Replacement Tax Return, Step 7, Line 48.
- A checkbox for reporting a discharge of indebtedness has been added to Form IL-1120, Step 1, Line U, Form IL-1120-ST, Step 1, Line S, and Form IL-1041, Fiduciary Income and Replacement Tax Return, Step 1, Line N.
- A checkbox to carryforward credit to a different Federal Employer Identification Number has been added to Form IL-1120, Step 8, Line 64, Form IL-1120-ST, Step 9, Line 64, Form IL-1065, Step 9, Line 65, Form IL-1041, Step 7, Line 58, and Form IL-990-T, Exempt Organization Income and Replacement Tax Return, Step 6, Line 32.
- Form IL-990-T and Form IL-990-T instructions have been renumbered due to the information on Lines 2 and 3 being removed.
2021 Withholding Income Tax
- Out-of-state employers who employ Illinois residents who worked from their Illinois residence for more than 30 days may be required to register with the department and withhold Illinois income tax from the employee; and
- Taxpayers registered for Illinois withholding income tax can electronically file Form IL-941-X, Amended Illinois Withholding Income Tax Return, using the Federal/State Employment Taxes (FSET) program. Previously, the FSET program only allowed filings of Form IL-941, Illinois Withholding Income Tax Return, but it now allows for amendments to those forms.
Sales Tax Update
Effective January 1, 2021, Public Acts 101-0031 and 101-0604 implemented a series of structural changes to the Illinois sales tax laws. The changes are intended to “level the playing field” between Illinois-based retailers and remote retailers by imposing state and local retailers’ occupation taxes on Illinois retailers and remote retailers alike. For more information, taxpayers may see the resource page for the leveling the playing field for Illinois retail act available on, tax.illinois.gov.
Among other topics the bulletin also discusses:
- Changes to the 2020 Illinois business income tax schedules;
- Important information for tax preparers and software vendors regarding 2020 tax forms;
- What to watch for in 2021, updates for which will be posted on illinois.gov; and
- Important tax due dates.
Informational Bulletin FY 2021-14, Illinois Department of Revenue, February 2021, ¶403-668
February 16, 2021