Illinois Department of Revenue

                                                                         November 2023
Publication 129 

Pass-through Entity Information

About this publication
Publication 129, Pass-through Entity Information, explains the tax obligations involved with distributions 
from pass-through entities (partnerships, S corporations, and fiduciaries) to members (partners, 
shareholders, and beneficiaries).  
This publication provides information for 
• pass-through entities that distribute pass-through income and modifications, pass-through 
  withholding, or pass-through entity (PTE) tax credit, and
• members who receive pass-through income and modifications, pass-through withholding, or PTE tax 
  credit.
Note: For the purposes of this publication, 
• ‘member’ means any partner, shareholder, or beneficiary. 
• ‘pass-through entity’ is any partnership, S corporation, or fiduciary. 
•  the acronym ‘PTE’ is used only in reference to PTE tax and PTE tax credit under Public Act 102-0658.

The information in this publication is current as of the date of the publication. Please visit the IDOR’s website 
at tax.illinois.gov to verify you have the most current revision.
The contents of this publication are informational only and do not take the place of statutes, administrative 
rules, and court decisions. For many topics covered in this publication, we have provided a reference to 
the applicable section or part of the Illinois Administrative Code for further clarification or more detail. All 
of the sections and parts referenced can be found in Title 86 of the Illinois Administrative Code.  

Taxpayer Bill of Rights
You have the right to call the Illinois Department of Revenue (IDOR) for help in resolving tax problems.
You have the right to privacy and confidentiality under most tax laws.
You have the right to respond, within specified time periods, to IDOR notices by asking questions, paying the amount due, 
or providing proof to refute IDOR’s findings.
You have the right to appeal IDOR decisions, in many instances, within specified time periods, by asking for IDOR review, 
by filing a petition with the Illinois Independent Tax Tribunal, or by filing a complaint in circuit court.
If you have overpaid your taxes, you have the right, within specified time periods, to a credit (or, in some cases, a refund) of 
that overpayment.
For more information about these rights and other IDOR procedures, you may write us at the following address:
Problems Resolution Division
Illinois Department of Revenue
PO Box 19014
Springfield, IL 62794-9014

    For information or forms, visit IDOR’s website at: tax.illinois.gov

Contents
Legal References ..................................................................................................................................................................... 3
General Information ................................................................................................................................................................ 3 
What is a pass-through entity? ..................................................................................................................................................... 3
What is pass-through entity income? ........................................................................................................................................... 3
What is PTE tax? .......................................................................................................................................................................... 3
How do I make the election to pay PTE tax?................................................................................................................................ 3
How is PTE tax reported and received? ....................................................................................................................................... 3
Is a pass-through entity required to make quarterly estimated payments? .................................................................................. 4
What is pass-through withholding?............................................................................................................................................... 5
Who is a resident? ........................................................................................................................................................................ 5
Who is a nonresident? .................................................................................................................................................................. 5
What is business income? ............................................................................................................................................................ 5
When is business income allocable to Illinois?............................................................................................................................. 5
What is nonbusiness income? ...................................................................................................................................................... 6
When is nonbusiness income allocable to Illinois?....................................................................................................................... 6
What is Form IL-1000-E? ............................................................................................................................................................. 6
What is Schedule B? .................................................................................................................................................................... 6
What is Schedule D? .................................................................................................................................................................... 6
What is Schedule K-1-P? ............................................................................................................................................................. 6
What is Schedule K-1-T?.............................................................................................................................................................. 6
What are Schedule K-1-P(1), Instructions for Partnerships and S Corporations Completing Schedule K-1-P and  
 Schedule K-1-P(3), and Schedule K-1-T(1), Instructions for Trusts and Estates Completing Schedule K-1-T  
 and Schedule K-1-T(3)? ...................................................................................................................................................... 7
What are Schedule K-1-P(2), Partner’s and Shareholder’s Instructions, and Schedule K-1-T(2), Beneficiary’s Instructions? .... 7
What are Schedule K-1-P(3), Pass-through Withholding Calculation for Nonresident Members, and Schedule K-1-T(3), 
 Pass-through Withholding Calculation for Nonresident Members? ..................................................................................... 7
What is an “investment partnership”? ........................................................................................................................................... 7
Can an investment partnership make the election to pay PTE tax?  ............................................................................................ 8
What are Personal Property Replacement Taxes? ....................................................................................................................... 8
Information for Pass-through Entities ............................................................................................................................... 8
What form(s) must the pass-through entity file? ........................................................................................................................... 9
Does pass-through withholding or PTE tax credit satisfy the Illinois tax liability for the member? ............................................... 9
What does Illinois do with the pass-through withholding information received from pass-through entities? ................................ 9
What if a pass-through entity overpays pass-through withholding or PTE tax? ........................................................................... 9
Information for Members ..................................................................................................................................................... 10
When is pass-through entity income, pass-through withholding, and PTE tax credit considered received? ............................. 10
What other states have a substantially similar entity-level tax? ................................................................................................. 10
Does the pass-through withholding or PTE tax credit fulfill my Illinois tax liability? .................................................................... 10
If a member is filing an Illinois income or replacement tax return, what form must they use? ................................................... 11
Helpful Hints and Reminders ............................................................................................................................................. 11
Partnerships and S corporations ................................................................................................................................................ 11
Fiduciaries .................................................................................................................................................................................. 11
Members..................................................................................................................................................................................... 12
Office Locations ..................................................................................................................................................................... 13
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Legal References

Statutory
Pass-through Withholding 35 ILCS 5/709.5
Pass-through Entity (PTE) Tax 35 ILCS 5/201(p)

Regulations
Pass-through Withholding 86 Ill. Adm. Code 100.7035

General Information

What is a pass-through entity?
A pass-through entity is any entity treated as a partnership, S corporation, or fiduciary for federal income 
tax purposes.

What is pass-through entity income?
Pass-through entity income is the income that partnerships, S corporations, or fiduciaries pass through 
to their members. Pass-through entity income is considered earned on the last day of the pass-through 
entity’s tax year. 

What is PTE tax?
PTE tax is an elective tax on partnerships (other than a publicly traded partnership under Internal 
Revenue Code (IRC) Section 7704) and subchapter S corporations effective for tax years ending on 
or after December 31, 2021, and beginning before January 1, 2026. An electing pass-through entity 
is subject to this tax for the privilege of earning or receiving income in Illinois in an amount equal to 
4.95 percent (.0495) of the taxpayer’s net income for the taxable year. Each partner or shareholder of an 
electing pass-through entity is allowed a credit against their own tax in an amount equal to 4.95 percent 
(.0495) times the partner or shareholder’s distributive share of the net income of the electing partnership 
or subchapter S corporation.

Note: For tax years ending on or after December 31, 2023, an electing pass-through entity may deduct 
distributions to retired partners when computing their net income if the retired partner distributions are 
exempt from tax under Illinois Income Tax Act (IITA) Section 203(a)(2)(F). See IITA Section 201(p)(3)(A) 
for more information.

How do I make the election to pay PTE tax?
The annual election to pay the PTE tax is made on Form IL-1065, Partnership Replacement Tax Return, 
or Form IL-1120-ST, Small Business Corporation Replacement Tax Return, for tax years ending on or 
after December 31, 2021, and beginning before January 1, 2026. The election is irrevocable after the 
extended due date for the taxable year of the election.

How is PTE tax reported and received?
PTE tax is
•  reported to IDOR on
   • Schedule B of Form IL-1065, Partnership Replacement Tax Return, or Form IL-1120-ST, Small 
     Business Corporation Replacement Tax Return.
   • Schedule D of Form IL-1041, Fiduciary Income and Replacement Tax Return, when PTE tax credit 
     received is distributed by the fiduciary. 

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•  reported to members as PTE tax credit on
  • Schedule K-1-P, Partner’s or Shareholder’s Share of Income, Deductions, Credits, and Recapture.
  • Schedule K-1-T, Beneficiary’s Share of Income and Deductions, when the PTE tax credit received 
    is distributed to the beneficiaries. 
•  received as a credit by individuals, partnerships, S corporations, corporations, trusts, estates, and 
  exempt organizations on Schedules K-1-P and K-1-T. 
  •  For individuals, corporations, exempt organizations and trusts or estates that do not pass-through/
    distribute income, the amount received on Schedule K-1-P or Schedule K-1-T is reported in the 
    payments section of their respective return.
  •  For partnerships, S corporations, and trusts or estates that pass-through/distribute income, each 
    member’s distributive share of the amount received is reported on that member’s Schedule K-1-P 
    or Schedule K-1-T.  
The PTE tax credit is considered paid/received on the last day of the pass-through entity’s tax year as 
shown on Schedule K-1-P or Schedule K-1-T.
A nonresident individual member of a partnership or S corporation for a taxable year in which the election 
to pay PTE tax was made shall not be required to file a Form IL-1040, Individual Income Tax Return, if 
•  the only source of net income of the individual (or the individual and the individual’s spouse in the 
  case of a joint return) is from an entity making the PTE tax election and 
• the credit allowed to the partner or shareholder equals or exceeds the individual’s liability for the tax 
  imposed under subsections (a) and (b) of Section 201 of the IITA for the taxable year.

Is a pass-through entity required to make quarterly estimated payments?
When a partnership or S corporation makes the election to pay the PTE tax, it is required to make 
quarterly estimated payments if the expected tax due (including both the PTE tax and replacement tax) 
is more than $500 or it will incur late estimated payment penalties. Estimated payments are due on or 
before the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. See 86 Ill. Admin. Code Section 
100.8010(c)(1). 
Note: IDOR will abate partnerships’ and S corporations’ late estimated payment penalties assessed for 
fourth quarter estimated payments due on December 15, 2022, as long as their fourth quarter estimated 
payments were made for the required amount and were paid on or before January 17, 2023. 
For tax years ending before December 31, 2022, IDOR will waive late estimated payment penalties 
related to an election to pay the PTE tax. 
For tax years ending on and after December 31, 2022, 
•  If the election to pay PTE tax is made, then estimated payments are based on the sum of the PTE tax 
  and replacement tax. The required estimated payments are 90 percent of the current year tax liability 
  or 100 percent of the tax liability in the prior year. 
• If the election to pay PTE tax is not made, then estimated payments are not required.  
Note: Use the Estimated Payment Worksheets in your specific return instructions to determine the 
correct amount of quarterly estimated payments to make. 
If a pass-through entity overpays PTE tax, the pass-through entity may request a refund. The members 
of the pass-through entity are allowed a credit only for their share of the calculated PTE tax due to the 
extent that the PTE tax was paid.

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What is pass-through withholding?
Pass-through withholding is the required payment reported and paid by a pass-through entity, that has 
not elected to pay PTE tax, on behalf of any nonresident member
•  who has not submitted Form IL-1000-E, Certificate of Exemption for Pass-through Withholding, to the 
  pass-through entity, and
• who receives business or nonbusiness income from the pass-through entity.
Pass-through withholding is
• reported to partners and shareholders on Schedule K-1-P or reported to beneficiaries on 
  Schedule K-1-T,
• reported to IDOR on Schedule B, Partners’ or Shareholders’ Information, of both Form IL-1065 and 
  Form IL-1120-ST, or reported to IDOR on Schedule D, Beneficiary Information, of Form IL-1041, and
•  paid electronically or by mail using the payment voucher for Form IL-1065, Form IL-1120-ST, or 
  Form IL-1041. 

Who is a resident?
A resident is
•  an individual who is present in Illinois for other than a temporary or transitory purpose,
•  an individual who is absent from Illinois for a temporary or transitory purpose but who is domiciled in 
  Illinois,
•  the estate of a decedent who at his or her death was domiciled in Illinois,
•  a trust created by a will of a decedent who at his or her death was domiciled in Illinois, or
• an irrevocable trust, whose grantor was domiciled in Illinois at the time the trust became irrevocable. 
  For purposes of this definition, a trust is irrevocable to the extent that the grantor is not treated as the 
  owner of the trust under Internal Revenue Code (IRC) Sections 671 through 678.

Who is a nonresident?
A nonresident is a person who is not a resident, as previously defined. Corporations, S corporations, 
and partnerships are considered nonresidents for purposes of pass-through entity income and Illinois 
Schedule B and Schedule D. 

What is business income?
Business income means all income, other than compensation, that may be apportioned by formula 
among the states in which you are doing business without violating the Constitution of the United States. 
All income of a partnership or S corporation is business income unless it is clearly attributable to only one 
state and is earned or received through activities totally unrelated to any business you are conducting in 
more than one state. Business income is net of all deductions attributable to that income. 

When is business income allocable to Illinois?
• For a resident of Illinois, all income received, regardless of the source, is allocable to Illinois.
•  For a nonresident of Illinois whose business income is derived 
  • wholly inside Illinois, the entire amount of business income is allocable to Illinois.
  • wholly outside Illinois, none of the business income is allocable to Illinois.
  • inside and outside Illinois, see the specific instructions for your return and the instructions in 
    Schedule K-1-P(2), Partner’s and Shareholder’s Instructions, or Schedule K-1-T(2), Beneficiary’s 
    Instructions.

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What is nonbusiness income?
Nonbusiness income is all income other than business income or compensation. It is income you can 
clearly classify as having no connection to your business. For information about types of nonbusiness 
income, see the instructions for Illinois Schedule NB, Nonbusiness Income.

When is nonbusiness income allocable to Illinois?
• For a resident of Illinois, all nonbusiness income is allocable to Illinois.
•  For a nonresident, items of income and deduction that constitute nonbusiness income received 
  through the pass-through entity are treated as if received directly by the member and are allocable 
  to Illinois according to the rules detailed in your return instructions and in the instructions in 
  Schedule K-1-P(2) or Schedule K-1-T(2).

What is Form IL-1000-E?
Form IL-1000-E is completed by any member that is not an individual, that elects to make its own 
tax payments on income from a pass-through entity and provides a signed copy of the form to the 
pass-through entity. By completing Form IL-1000-E, the member is certifying it will file all Illinois income 
tax returns and make timely payment of all Illinois income taxes due. 
Form IL-1000-E does not apply to a pass-through entity that elects to pay PTE tax. Any Form IL-1000-E 
on file can be ignored when the pass-through entity elects to pay PTE tax. If the pass-through entity does 
not elect to pay PTE tax, then Form IL-1000-E is effective. 

Note: Do not submit Form IL-1000-E to IDOR unless requested to do so. Pass-through entities and 
members must retain a copy of any Form IL-1000-E they receive or complete. The copy must be made 
available for inspection by authorized IDOR agents and employees if requested. 

What is Schedule B?
Schedule B is the required schedule for partnerships and S corporations to provide information 
to IDOR about their members, certain items of income and credits the member receives from the 
pass-through entity, and pass-through withholding made on the members’ behalf. If a partnership or 
S corporation passes any income through to a member, then the pass-through entity must provide 
IDOR with all the required information on an IDOR-approved form. Schedule B must be included with 
Form IL-1065 and Form IL-1120-ST.

What is Schedule D?
Schedule D is the required schedule for fiduciaries to provide information to IDOR about their members, 
certain items of income and credits the members receive from the pass-through entity and pass-through 
withholding made on the members’ behalf. If a fiduciary passes any income through to a member, then 
the pass-through entity must provide IDOR with all the required information on an IDOR-approved form. 
If you distribute any income or credit to any members, Schedule D must be included with Form IL-1041.

What is Schedule K-1-P?
Schedule K-1-P is the form a partnership or an S corporation uses to supply each member who was a 
partner or shareholder at any time during the tax year with the information needed to properly report the 
pass-through income and modifications, PTE tax credit, and pass-through withholding (including any 
applicable investment partnership withholding) on the member’s Illinois income tax return. 

What is Schedule K-1-T?
Schedule K-1-T is the form a trust or an estate uses to supply each member who was a beneficiary at 
any time during the tax year with the information needed to properly report the pass-through income and 
modifications, PTE tax credit, and pass-through withholding on the member’s Illinois income tax return.

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What are Schedule K-1-P(1), Instructions for Partnerships and S Corporations 
Completing Schedule K-1-P and Schedule K-1-P(3), and Schedule K-1-T(1), 
Instructions for Trusts and Estates Completing Schedule K-1-T and 
Schedule K-1-T(3)?
Schedule K-1-P(1) and Schedule K-1-T(1) provide the pass-through entity with instructions on how to 
supply each member’s share of the amounts reported on the pass-through entity’s federal income tax 
and Illinois business income tax returns. 

What are Schedule K-1-P(2), Partner’s and Shareholder’s Instructions, and 
Schedule K-1-T(2), Beneficiary’s Instructions? 
Schedule K-1-P(2) and Schedule K-1-T(2) provide the member with instructions on how to report the 
income, additions, subtractions, and credits reported to them by the pass-through entity. 

What are Schedule K-1-P(3), Pass-through Withholding Calculation for Nonresident 
Members, and Schedule K-1-T(3), Pass-through Withholding Calculation for 
Nonresident Members?
Schedule K-1-P(3) and Schedule K-1-T(3) are used to calculate the required tax a pass-through entity 
must report and pay on behalf of its nonresident members that receive business or nonbusiness income 
from the pass-through entity. See Schedule K-1-P(1) or Schedule K-1-T(1) for specific instructions 
on how to complete Schedule K-1-P(3) or Schedule K-1-T(3). Pass-through entities should not 
send Schedule(s) K-1-P(3) or Schedule(s) K-1-T(3) to its members or submit them to IDOR unless 
IDOR requests them. Keep Schedule(s) K-1-P(3) or Schedule(s) K-1-T(3) with income tax records. 
Pass-through entities should not complete Schedule K-1-P(3) if electing to pay PTE tax or if a member 
gives them Form IL-1000-E.

What is an “investment partnership”?
A partnership is classified as an investment partnership if at least 90 percent of its assets are investments 
in stocks, bonds, options, and similar intangible assets, and at least 90 percent of its income is derived 
from that kind of asset. 

Note: For tax years ending on or after December 31, 2023, 90 percent of an investment partnership’s 
income may also include the distributive share of partnership income from lower-tier partnership interests 
that meet the definition of qualifying investment securities. See IITA Section 1501(a)(11.5) for more 
information.

For tax years ending on or after December 31, 2004 – Investment partnerships are not subject to 
Illinois replacement tax.  

For tax years ending on or after December 31, 2023 – Investment partnerships are required to 
withhold an amount from each applicable nonresident partner. Investment partnerships must complete a 
Schedule K-1-P(4), Investment Partnership Withholding Calculation for Nonresident Partners, for each 
applicable nonresident partner to calculate the required amount of investment partnership withholding. 
Investment partnerships withholding for nonresident partners must file Form IL-1065 to report the 
withholding amount. See IITA Section 709.5(d) and the Form IL-1065 instructions for more information. 
Note: Form IL-1000-E, Certificate of Exemption for Pass-through Withholding, does not exempt an 
investment partnership from investment partnership withholding.  
If the investment partnership has no applicable nonresident members, it is not subject to the withholding 
requirement, it is not subject to replacement tax, and is not required to file Form IL-1065. An investment 
partnership may elect to pay PTE tax in which it must file the Form IL-1065, check the box that it is 
making the election to pay PTE tax, and complete the PTE Income Worksheet in the Form IL-1065 
instructions as if it did not qualify as an investment partnership. 

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Note: Electing to pay PTE tax does not exempt an investment partnership from withholding for its 
nonresident partners. Investment partnerships electing to pay PTE tax must withhold from each of its 
applicable nonresident partners prior to calculating the PTE tax. The investment partnership should 
deduct any income subject to withholding when calculating the income subject to PTE tax. See the Form 
IL-1065 instructions for more information.

For tax years ending prior to December 31, 2023, and on or after December 31, 2004 - An 
investment partnership is not subject to replacement tax, and a nonresident partner is not subject 
to Illinois tax on the income passed through from the investment partnership, unless the partner’s 
investment in the partnership was made in connection with a business the partner is conducting at 
least partially within Illinois. If you qualify as an investment partnership, you are not required to file 
Form IL-1065, even if you are required to file a federal tax return (federal Form 1065, U.S. Return of 
Partnership Income). However, if you are an investment partnership who elects to pay PTE tax, then you 
must file the Form IL-1065, check the box that you are making the election to pay PTE tax, and complete 
the PTE Income Worksheet in the Form IL-1065 instructions as if you did not qualify as an investment 
partnership.

For tax years ending prior to December 31, 2004 - Investment partnerships and their partners are 
subject to the same rules as other partnerships and partners. See IITA Section 1501(a)(11.5) and 
86 Ill. Adm. Code Section 100.9730 for more information.

For more information about partnerships, see our Partnership webpage.

Can an investment partnership make the election to pay PTE tax?
Yes. An investment partnership making the election to pay PTE tax must file Form IL-1065 and check the 
box indicating it is making the election to pay PTE tax. The investment partnership will complete the PTE 
Income Worksheet in the Form IL-1065 instructions as if it did not qualify as an investment partnership. 
See our Partnership webpage for more information.

What are Personal Property Replacement Taxes?
Personal Property Replacement Taxes are revenues received from businesses and public utilities, 
collected by the State of Illinois, and paid to local governments. Prior to 1979, business entities were 
required to pay personal property taxes. Legislation abolished the personal property taxes. To replace 
the money lost by units of local government and school districts, a new law was enacted that established 
replacement taxes, assessed at a flat rate based on the income of the business. 
Business entities, including corporations, S corporations, partnerships, and trusts pay replacement tax 
on their annual tax returns. Replacement taxes are different from the standard Illinois income tax. Illinois 
income tax is paid only by individuals, trusts, estates, and corporations (not including S corporations). 
Pass-through entities that have income taxable in Illinois must file an annual tax return with IDOR. 
Partnerships and S corporations do not pay Illinois income tax (the members pay Illinois income tax) but 
they are subject to the replacement tax at a rate of 1.5 percent (.015) on income taxable to Illinois. Trusts 
pay both Illinois income and replacement taxes. 

Information for Pass-through Entities

Pass-through entities must pay pass-through withholding for their nonresident members (including 
corporations, S corporations, and partnerships) unless the pass-through entity is a partnership or 
S corporation who elects to pay PTE tax for all their members. 
Pass-through withholding is the payment the pass-through entity who does not elect to pay PTE tax 
makes on behalf of all nonresident members who did not submit Form IL-1000-E to the pass-through 
entity. PTE tax is the payment the pass-through entity who elects to pay PTE tax makes for all members 
based on their distributive share of the pass-through entity’s income. A pass-through entity will pay 
pass-through withholding or PTE tax, but not both. A pass-through entity that receives credit for 
pass-through withholding may use it to offset its PTE tax liability if they elect to pay PTE tax.  
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Entities or individuals receiving a pass-through withholding credit or a PTE tax credit receive 
Schedule K-1-P as a partner or shareholder or Schedule K-1-T as a beneficiary in a pass-through entity. 
Any member that is a pass-through entity itself is required to report and pay pass-through withholding 
on behalf of the pass-through entity’s own nonresident members on the income passed through to them 
unless they elect to pay PTE tax for all their members. Members may claim credit on their own Illinois 
income tax return for pass-through withholding reported and paid on their behalf. Any entity receiving 
the PTE tax credit that is not itself a pass-through entity, must report the PTE tax credit in the payment 
section of its own return. If the entity receiving the PTE tax credit is itself a pass-through entity, then the 
credit is passed through to its members based on each member’s distributive share and reported on 
Schedule K-1-P or Schedule K-1-T. In the case of a trust, if the PTE tax credit is retained by the fiduciary 
the credit is reported in the payments section on its own return; however, if the credit is distributed 
to the beneficiaries, the credit is reported on Schedule D of its own return and on each beneficiary’s 
Schedule K-1-T. 

What form(s) must the pass-through entity file?
Partnerships file Form IL-1065, including Schedule B.
S corporations file Form IL-1120-ST, including Schedule B.
Trusts and Estates file Form IL-1041, including Schedule D. 
All required supporting Illinois schedules must be included with each return. These returns can be filed 
electronically through the Modernized e-File program (MeF) using third-party tax-prep software or mailed 
to the address on the return.

Does pass-through withholding or PTE tax credit satisfy the Illinois tax liability for 
the member?
Maybe. If a member is a nonresident individual and the reported pass-through withholding or PTE tax 
credit satisfies the member’s Illinois income tax liability, then the member is not required to file an Illinois 
income tax return. If the member has Illinois income from other sources or the pass-through withholding 
or PTE tax credit paid does not cover the member’s Illinois income tax liability, the member must file 
a return to report the tax on all of the member’s Illinois income and claim a credit for pass-through 
withholding or PTE tax paid. 
All Illinois residents who receive pass-through withholding or PTE tax credit must file an Illinois income 
tax return regardless of whether the pass-through withholding or PTE tax credit satisfies the member’s 
Illinois income tax liability.

What does Illinois do with the pass-through withholding information received from 
pass-through entities?
The member information obtained from Schedule B or Schedule D is used to ensure that taxpayers who 
received income from Illinois sources have filed the appropriate tax return and paid any required tax. 
Taxpayers who have not filed an Illinois tax return, but who should have, may receive a Non-filer Notice 
or a Notice of Proposed Tax Due. Penalties and interest may be assessed according to Illinois law. If 
taxpayers do not respond to these notices, the tax, penalty, and interest will be deemed assessed, and 
the taxpayer will be referred for collection activity. Collection activity can result in property liens, frozen 
assets and accounts, and wage garnishments.

What if a pass-through entity overpays pass-through withholding or PTE tax?
If a pass-through entity overpays pass-through withholding or PTE tax, the pass-through entity may 
request a refund. The members of the pass-through entity are allowed a credit only for their share of 
pass-through withholding or the calculated PTE tax due to the extent that the PTE tax was paid.
A pass-through entity cannot amend a return merely to request a refund of any pass-through withholding 
or PTE tax paid. In the case of any overpayment, the member must file a timely claim for credit or refund 
of any pass-through withholding or PTE tax credit overpaid by the pass-through entity. 

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Information for Members

Each pass-through entity that distributes pass-through entity income and modifications and reports 
pass-through withholding or PTE tax to IDOR is also responsible for providing this information to its 
members. For Illinois purposes, the partnership or S corporation should issue a Schedule K-1-P and 
a Schedule K-1-P(2), showing the partner’s or shareholder’s share of income and modifications, and 
pass-through withholding or PTE tax credit, and the fiduciary should issue a Schedule K-1-T and a 
Schedule K-1-T(2), showing the beneficiary’s share of income and modifications, and pass-through 
withholding or PTE tax credit.
The pass-through entity listed on the front of Schedule K-1-P or Schedule K-1-T has completed and 
provided you with the schedule to reflect your specific share of the pass-through entity’s income and 
modifications, and credits. Use the completed schedule you received and Schedule K-1-P(2) or Schedule 
K-1-T(2) to help report the items shown on Schedule K-1-P or Schedule K-1-T on your Illinois income tax 
return. Attach a copy of Schedule K-1-P or Schedule K-1-T to your tax return and keep a copy for your 
records. 

When is pass-through entity income, pass-through withholding, and PTE tax credit 
considered received?
Pass-through entity income, modifications, pass-through withholding, and PTE tax credit are considered 
received on the last day of the pass-through entity’s taxable year. Pass-through entity income and 
modifications, pass-through withholding, and PTE tax credit are not considered received equally 
throughout the year nor are they considered received on the last day of your tax year. The pass-through 
entity’s tax year ending is listed at the top of the Schedule K-1-P or Schedule K-1-T you received. 
Members need to be aware of how this affects their Illinois income tax liability. The two instances when 
the timing of the receipt of pass-through entity income and modifications, pass-through withholding, and 
PTE tax credit are particularly important are
•  when determining estimated payments and 
• if the tax rate changes during your tax year.

What other states have a substantially similar entity-level tax?
IDOR has determined there are many states with substantially similar taxes as the tax imposed under 
Section 201(p) of the Illinois Income Tax Act. Please refer to the webpage titled “States with Substantially 
Similar Entity-Level Tax as Illinois” on the IDOR website.

Does the pass-through withholding or PTE tax credit fulfill my Illinois tax liability?
Based on the information provided by the pass-through entity and any other Illinois-based income, you 
must determine your own Illinois tax liability. Use Schedule K-1-P(2) or Schedule K-1-T(2) to determine 
where to report the information from Schedule K-1-P or Schedule K-1-T on your Illinois income tax return. 
Any Illinois-sourced income you receive is taxable by Illinois. If you complete your tax return correctly, 
you will only be taxed on the Illinois-sourced income.
If you are a nonresident individual and the pass-through withholding or PTE tax credit reported to you 
satisfies your Illinois income tax liability, then you are not required to file an Illinois income tax return. If 
you have Illinois income from other sources or the pass-through withholding or PTE tax credit paid does 
not cover your liability, then you must file a return to report the tax on all your Illinois income and claim a 
credit for the pass-through withholding or PTE tax credit. A nonresident individual member may be able to 
take a credit for taxes paid to Illinois on the member’s home state’s tax return.
Illinois residents must file their own Illinois income tax returns and claim credit for any pass-through 
withholding or PTE tax credit reported to them.
Business entities that receive income from a pass-through entity are responsible for paying tax on that 
income.

PUB-129 (R-11/23)                                                                  Page  10 of 13

If a member is filing an Illinois income or replacement tax return, what form must 
they use?

If the member is a(n)                    then the member should file       

Individual (married or single)           Form IL-1040, Individual Income Tax Return.
Illinois nonresidents must also file     Form IL-1040, Schedule NR, Nonresident and Part-Year 
                                         Resident Computation of Illinois Tax.
Fiduciary (Trust or Estate)              Form IL-1041, Fiduciary Income and Replacement Tax 
                                         Return, including Schedule D.
Illinois nonresidents must also file     Form IL-1041, Schedule NR, Nonresident Computation of 
                                         Fiduciary Income.
Corporation                              Form IL-1120, Corporation Income and Replacement Tax 
                                         Return.
S corporation                            Form IL-1120-ST, Small Business Corporation Replacement 
                                         Tax Return, including Schedule B.
Partnership                              Form IL-1065, Partnership Replacement Tax Return, including 
                                         Schedule B.
Exempt Organization                      Form IL-990-T, Exempt Organization Income and 
                                         Replacement Tax Return.
Unitary Group                            The appropriate return with Schedule UB, Combined 
                                         Apportionment for Unitary Business Group, attached.
Additional schedules and information may be required. For more information, see the instructions for the 
specific tax return you are filing. Returns, instructions, and schedules can be found in the “Forms” area 
of IDOR’s website at tax.illinois.gov.

Helpful Hints and Reminders

Partnerships and S corporations
• File a return with a fully completed Schedule B listing all partners or shareholders.  
• If you elect to pay PTE tax, make all required estimated payments timely (estimated payments are 
  due on or before the 15th day of the 4th, 6th, 9th, and 12th months of the tax year).
• Complete a Schedule K-1-P for each partner or shareholder.
• Distribute the completed Schedules K-1-P to your partners or shareholders in a timely manner. 
  Schedule K-1-P(2) must also be included with each Schedule K-1-P that is distributed.
• If your partners or shareholders contact you with questions that you cannot answer, refer them to 
  IDOR or the partner’s or shareholder’s tax professional.
• Do not accept Form IL-1000-E from an individual member.

Fiduciaries
• File a return with a fully completed Schedule D listing all beneficiaries.
• Complete a Schedule K-1-T for each beneficiary.
• Distribute the completed Schedules K-1-T to your beneficiaries in a timely manner. Schedule K-1-T(2) 
  must also be included with each Schedule K-1-T that is distributed.
• If your beneficiaries contact you with questions that you cannot answer, refer them to IDOR or the 
  beneficiary’s tax professional.
• Do not accept Form IL-1000-E from an individual member.

PUB-129 (R-11/23)                                                                           Page  11 of 13

Members
• Any Illinois-sourced income is taxable in Illinois.
•  If you receive one or more Schedules K-1-P or Schedules K-1-T then you may have an Illinois tax 
  liability. You must determine your own Illinois tax liability and filing responsibility.
• If you did not receive Schedule K-1-P(2) or Schedule K-1-T(2) to help you complete an Illinois income 
  tax return, see IDOR’s website at tax.illinois.gov to view these instructions.
• If you received a Non-filer Notice or a Notice of Proposed Tax Due from IDOR, you should respond 
  within the time frame provided on the notice.
•  If you have a paid tax preparer, complete and submit a Form IL-2848, Power of Attorney, so your 
  preparer may respond to IDOR on your behalf.
•  If you did not receive a Schedule K-1-P or Schedule K-1-T from the pass-through entity, then you 
  should contact the pass-through entity directly to obtain the schedule.
• Individual members may file using IDOR’s MyTax Illinois, our free online account management 
  program, at mytax.illinois.gov.
•  Pass-through entity income, pass-through withholding (including any eligible investment partnership 
  withholding), and PTE tax credit are considered earned on the last day of the pass-through entity’s 
  taxable year.

PUB-129 (R-11/23)                                                                         Page  12 of 13

                                       Maine North Regional Building
                                       9511 Harrison Street FA 203
Office Locations
                                       Des Plaines, Illinois 60016-1563
                                       800 732-8866 
                                       217 782-3336

200 South Wyman Street
Rockford, Illinois 61101-1237
                                                                                     555 West Monroe Street
800 732-8866 
                                                                                     Suite 1100
217 782-3336
                                                                                     Chicago, Illinois 60661-3605
                                                                                     800 732-8866 
                                                                                     217 782-3336

                                                                                     Willard Ice Building
                                                                                     101 West Jefferson
                                                                                     Springfield, Illinois 62702
                                                                                     800 732-8866
                                                                                     217 782-3336
15 Executive Drive
Business Center One, Suite 2
Fairview Heights, Illinois 62208-1331
800 732-8866 
217 782-3336

                  2309 W. Main
                  Suite 114
                  Marion, Illinois 62959-1196
                  800 732-8866 
                  217 782-3336

  For Information Visit our website at tax.illinois.gov or scan the QR code provided.
  or Forms
                  Call us at 1 800 732-8866 or 217 782-3336 (TTY at 1 800 544-5304).
                  Write us at Illinois Department of Revenue, PO Box 19044, Springfield, IL  62794-9044.
                  Call our 24-hour Forms Order Line at 1 800 356-6302.   

PUB-129 (R-11/23)     Printed by authority of the state of Illinois - electronic only, one copy            Page  13 of 13