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Illinois Department of Revenue

Publication 129 March 2022

Pass-through Entity Information

The information in this publication
is current as of the date of the About this publication
publication. Please visit our website at Publication 129, Pass-through Entity Information, explains the tax
tax.illinois.gov to verify you have the obligations involved with distributions from pass-through entities
most current revision. (partnerships, S corporations, and fiduciaries) to members (partners,
This publication is written in the plain shareholders, and beneficiaries).
English style so the tax information is
This publication provides information for
easier to understand. As a result, we
do not directly quote Illinois statutes • pass-through entities that distribute pass-through income and
or the Illinois Administrative Code. modifications, pass-through withholding, or pass-through entity
The contents of this publication are (PTE) tax credit, and
informational only and do not take • members who receive pass-through income and modifications,
the place of statutes, rules, and court pass-through withholding, or PTE tax credit.
decisions. For many topics covered
in this publication, we have provided Note: For the purposes of this publication,
a reference to the applicable section • ‘member’ means any partner, shareholder, or beneficiary.
or part of the Illinois Administrative • ‘pass-through entity’ is any partnership, S corporation, or
Code for further clarification or more fiduciary.
detail. All of the sections and parts
• the acronym ‘PTE’ is used only in reference to PTE tax and PTE
referenced can be found in Title 86 of
tax credit under Public Act 102-0658.
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 department
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

Get forms and other information faster and easier at tax.illinois.gov

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                                               Pass-through Entity Information

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

Legal References
Statutory                                                  Regulations
Pass-through Withholding 35 ILCS 5/709.5                   Pass-through Withholding 86 Ill. Adm. Code 100.7035
Pass-through Entity (PTE) Tax 35 ILCS 5/201(p)

Definitions
What is a pass-through entity?                               •  Schedule D of Form IL-1041, Fiduciary Income 
                                                               and Replacement Tax Return, when PTE tax 
A pass-through entity is any entity treated as a 
                                                               credit received is distributed by the fiduciary. 
partnership, S corporation, or fiduciary for federal 
income tax purposes.                                       •  reported to members as PTE tax credit on
What is pass-through entity income?                          • Schedule K-1-P, Partner’s or Shareholder’s 
                                                               Share of Income, Deductions, Credits, and 
Pass-through entity income is the income that 
                                                               Recapture
partnerships, S corporations, or fiduciaries pass through 
to their members. Pass-through entity income is              • Schedule K-1-T, Beneficiary’s Share of Income 
considered earned on the last day of the pass-through          and Deductions, when the PTE tax credit 
entity’s tax year.                                             received is distributed to the beneficiaries. 
                                                           •  received as a credit by individuals, partnerships, 
What is the pass-through entity (PTE) tax?
                                                             S corps, corporations, trusts, estates, and exempt 
Pass-through entity tax is an elective tax on                organizations on Schedules K-1-P and K-1-T. 
partnerships (other than a publicly traded partnership 
                                                             •  For individuals, corporations, exempt 
under Internal Revenue Code (IRC) Section 7704) 
                                                               organizations and trusts or estates that do not 
and Subchapter S corporations effective for tax years 
                                                               pass-through/distribute income, the amount 
ending on or after December 31, 2021, and beginning 
                                                               received on Schedule K-1-P is reported in the 
before January 1, 2026. An electing pass-through 
                                                               payments section of their respective return.
entity is subject to this tax for the privilege of earning 
or receiving income in Illinois in an amount equal to        •  For partnerships, S corporations, and trusts or 
4.95 percent (.0495) of the taxpayer’s net income for          estates that pass-through/distribute income, 
the taxable year. Each partner or shareholder of an            each member’s distributive share of the 
electing pass-through entity is allowed a credit against       amount received is reported on that member’s 
their own tax in an amount equal to 4.95 percent               Schedule K-1-P or Schedule K-1-T.  
(.0495) times the partner or shareholder’s distributive    The PTE tax credit is considered paid/received on the 
share of the net income of the electing partnership or     last day of the pass-through entity’s tax year as shown 
subchapter S corporation.                                  on Schedule K-1-P or Schedule K-1-T.
How do I make the election to pay PTE tax?                 A nonresident individual member of a partnership or 
The election to pay the PTE tax is made on                 S corporation for a taxable year in which the election 
Form IL-1065, Partnership Replacement Tax Return,          to pay PTE tax was made shall not be required to file a 
or Form IL-1120-ST, Small Business Corporation             Form IL-1040, Individual Income Tax Return, if 
Replacement Tax Return, for tax years ending on            • the only source of net income of the individual (or 
or after December 31, 2021, and beginning before             the individual and the individual’s spouse in the 
January 1, 2026.                                             case of a joint return) is from an entity making the 
                                                             PTE tax election and 
How is PTE tax reported and received?
                                                           • the credit allowed to the partner or shareholder 
PTE tax is
                                                             equals or exceeds the individual’s liability for the 
•  reported to IDOR on                                       tax imposed under subsections (a) and (b) of 
   •  Schedule B of Form IL-1065, Partnership                Section 201 of the Illinois income tax Act for the 
   Replacement Tax Return, or Form IL-1120-ST,               taxable year.
   Small Business Corporation Replacement Tax 
   Return.

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                                                                               Pass-through Entity Information
Is a pass-through entity required to make quarterly      •  paid electronically or by mail using the payment 
estimated payments?                                      voucher for Form IL-1065, Form IL-1120-ST, or 
                                                         Form IL-1041. 
When a partnership or S corporation makes the election 
to pay the PTE tax, it is required to make quarterly     Who is a resident?
estimated payments if the expected tax due (including 
                                                         A resident is
both the PTE tax and replacement tax) is more than 
$500 or it will incur late estimated payment penalties.  •  an individual who is present in Illinois for other than 
                                                         a temporary or transitory purpose,
For tax years ending before December 31, 2022, the 
Illinois Department of Revenue (IDOR) will waive late    •  an individual who is absent from Illinois for a 
estimated payment penalties related to an election to    temporary or transitory purpose but who is domiciled 
pay the PTE tax.                                         in Illinois,
For tax years ending on and after December 31, 2022,     •  the estate of a decedent who at his or her death was 
                                                         domiciled in Illinois,
• If the election to pay PTE tax is made, then 
  estimated payments are based on the sum of             •  a trust created by a will of a decedent who at his or 
  the PTE tax and replacement tax. If a taxpayer         her death was domiciled in Illinois, or
  paid PTE tax for the prior year, whether as            •  an irrevocable trust, whose grantor was domiciled 
  estimated, extension or return payments, then          in Illinois at the time the trust became irrevocable. 
  the total minimum required estimated payments          For purposes of this definition, a trust is irrevocable 
  are 90 percent of the current year tax liability or    to the extent that the grantor is not treated as the 
  100 percent of the tax liability in the prior year.    owner of the trust under Internal Revenue Code 
• If the election to pay PTE tax is not made, then       (IRC) Sections 671 through 678.
  estimated payments are not required.  
                                                         Who is a nonresident?
Note: Use the Estimated Payment Worksheets in your 
                                                         A nonresident is a person who is not a resident, as 
specific return instructions to determine the correct 
                                                         previously defined. Corporations, S corporations, and 
amount of quarterly estimated payments to make. 
                                                         partnerships are considered nonresidents for purposes 
If a pass-through entity overpays PTE tax, the pass-     of pass-through entity income and Illinois Schedule B 
through entity may request a refund. The members of      and Schedule D. 
the pass-through entity are allowed a credit only for 
their share of the calculated PTE tax due to the extent  What is business income?
that the PTE tax was paid.                               Business income means all income, other than 
                                                         compensation, that may be apportioned by formula 
What is pass-through withholding?
                                                         among the states in which you are doing business 
Pass-through withholding is the required payment         without violating the Constitution of the United States. 
reported and paid by a pass-through entity, that has not All income of a partnership or S corporation is business 
elected to pay PTE tax, on behalf of any nonresident     income unless it is clearly attributable to only one state 
member                                                   and is earned or received through activities totally 
•  who has not submitted Form IL-1000-E, Certificate     unrelated to any business you are conducting in more 
  of Exemption for Pass-through Withholding, to the      than one state. Business income is net of all deductions 
  pass-through entity, and                               attributable to that income. 

•  who receives business or nonbusiness income from      When is business income allocable to Illinois?
  the pass-through entity.
                                                         •  For a resident of Illinois, all income received, 
Pass-through withholding is                              regardless of the source, is allocable to Illinois.
•  reported to partners and shareholders on              •  For a nonresident of Illinois whose business income 
  Schedule K-1-P or reported to beneficiaries on         is derived 
  Schedule K-1-T,
                                                         •  wholly inside Illinois, the entire amount of 
•  reported to the Illinois Department of Revenue        business income is allocable to Illinois.
  (IDOR) on Schedule B, Partners’ or Shareholders’ 
                                                         •  wholly outside Illinois, none of the business 
  Information, of both Form IL-1065 and 
                                                         income is allocable to Illinois.
  Form IL-1120-ST, or reported to IDOR on Schedule 
  D, Beneficiary Information, of Form IL-1041, and
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                                                                                   Pass-through Entity Information
• inside and outside Illinois, see the specific           What is Schedule D?
  instructions for your return and the instructions in 
                                                          Schedule D is the required schedule for fiduciaries 
  Schedule K-1-P(2), Partner’s and Shareholder’s 
                                                          to provide information to IDOR about their members, 
  Instructions, or Schedule K-1-T(2), Beneficiary’s 
                                                          certain items of income and credits the members 
  Instructions.
                                                          receive from the pass-through entity and pass-through 
What is nonbusiness income?                               withholding made on the members’ behalf. If a fiduciary 
                                                          passes any income through to a member, then the 
Nonbusiness income is all income other than business 
                                                          pass-through entity must provide IDOR with all the 
income or compensation. It is income you can clearly 
                                                          required information on an IDOR-approved form. 
classify as having no connection to your business. For 
                                                          Schedule D must be included with Form IL-1041.
information about types of nonbusiness income, see 
the instructions for Illinois Schedule NB, Nonbusiness    What is Schedule K-1-P?
Income.
                                                          Schedule K-1-P is the form a partnership or an S 
When is nonbusiness income allocable to Illinois?         corporation uses to supply each individual or entity who 
                                                          was a member at any time during the tax year with the 
•  For a resident of Illinois, all nonbusiness income is 
                                                          information needed by the member to properly report 
allocable to Illinois.
                                                          the pass-through income and modifications, pass-
•  For a nonresident, items of income and deduction       through entity tax credit, and pass-through withholding 
that constitute nonbusiness income received               on the member’s Illinois income tax return. 
through the pass-through entity are treated as if 
received directly by the member and are allocable         What is Schedule K-1-T?
to Illinois according to the rules detailed in your       Schedule K-1-T is the form a trust or an estate uses to 
return instructions and in the instructions in            supply each beneficiary who was a member at any time 
Schedule K-1-P(2) or Schedule K-1-T(2).                   during the tax year with the information needed by the 
                                                          member to properly report the pass-through income and 
What is Form IL-1000-E?                                   modifications, pass-through entity tax credit, and pass-
Form IL-1000-E is completed by any member that is not  through withholding on the member’s Illinois income tax 
an individual, that elects to make its own tax payments   return.
on income from a pass-through entity and provides a 
signed copy of the form to the pass-through entity. By    What are Schedule K-1-P(1), Instructions for 
completing Form IL-1000-E, the member is certifying it    Partnerships and S Corporations Completing 
will file all Illinois income tax returns and make timely Schedule K-1-P and Schedule K-1-P(3), and 
payment of all Illinois income taxes due.                 Schedule K-1-T(1), Instructions for Trusts and 
                                                          Estates Completing Schedule K-1-T and Schedule 
Form IL-1000-E does not apply to a pass-through entity    K-1-T(3)?
that elects to pay PTE tax. Any Form IL-1000-E on file 
                                                          Schedule K-1-P(1) and Schedule K-1-T(1) provide the 
can be ignored when the pass-through entity elects to 
                                                          pass-through entity with instructions on how to supply 
pay PTE tax. If the pass-through entity does not elect to 
                                                          each member’s share of the amounts reported on the 
pay PTE tax, then the IL-1000-E is effective. 
                                                          pass-through entity’s federal income tax and Illinois 
What is Schedule B?                                       business income tax returns. 

Schedule B is the required schedule for partnerships      What are Schedule K-1-P(2), Partner’s and 
and S corporations to provide information to IDOR         Shareholder’s Instructions, and Schedule K-1-T(2), 
about their members, certain items of income and          Beneficiary’s Instructions? 
credits the member receives from the pass-through 
                                                          Schedule K-1-P(2) and Schedule K-1-T(2) provide the 
entity, PTE tax, and pass-through withholding made on 
                                                          member with instructions on how to report the income, 
the members’ behalf. If a partnership or S corporation 
                                                          additions, subtractions, and credits reported to them by 
passes any income through to a member, then the 
                                                          the pass-through entity. 
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.

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Pass-through Entity Information

What are Schedule K-1-P(3), Pass-through Can an investment partnership make the election to
Withholding Calculation for Nonresident Members, pay PTE tax?
and Schedule K-1-T(3), Pass-through Withholding Yes. An investment partnership making the election to
Calculation for Nonresident Members? pay PTE tax must file Form IL-1065 and check the box
Schedule K-1-P(3) and Schedule K-1-T(3) are indicating it is making the election to pay PTE tax. The
used to calculate the required tax you must report investment partnership will complete the PTE Income
and pay on behalf of your nonresident members Worksheet in the Form IL-1065 Instructions as if it
that receive business or nonbusiness income from did not qualify as an investment partnership. See our
your pass-through entity. See Schedule K-1-P(1) or Partnership web page for more information.
Schedule K-1-T(1) for specific instructions on how to
What are Personal Property Replacement Taxes?
complete Schedule K-1-P(3) or Schedule K-1-T(3). Do
not send Schedule(s) K-1-P(3) or Schedule(s) K-1-T(3) Personal Property Replacement Taxes are revenues
to your members or submit it to IDOR unless we received from businesses and public utilities, collected
request it from you. Keep Schedule(s) K-1-P(3) or by the State of Illinois, and paid to local governments.
Schedule(s) K-1-T(3) with your income tax records. Prior to 1979, business entities were required to pay
Do not complete Schedule K-1-P(3) if you elect to personal property taxes. Legislation abolished the
pay pass-through entity tax or if a member gives you personal property taxes. To replace the money lost by
Form IL-1000-E. units of local government and school districts, a new
law was enacted that established replacement taxes,
What is an investment partnership? assessed at a flat rate based on the income of the
An investment partnership is a partnership where business.
at least 90 percent of its assets are investments in Business entities, including corporations, S corporations,
stocks, bonds, options, and similar intangible assets, partnerships, and trusts pay replacement tax on their
and at least 90 percent of its income is derived from annual tax returns. Replacement taxes are different from
those types of assets. For tax years ending on or after the standard Illinois income tax. Illinois income tax is
December 31, 2004, an investment partnership is not paid only by individuals, trusts, estates, and corporations
subject to replacement tax and is not required to file an (not including S corporations). Pass-through entities
Illinois tax return. that have income taxable in Illinois must file an annual
A partner in an investment partnership is not subject tax return with IDOR. Partnerships and S corporations
to Illinois tax on the income passed through from do not pay Illinois income tax (the members pay Illinois
the investment partnership, unless the partner’s income tax) but they are subject to the replacement
investment in the partnership was made in connection tax at a rate of 1.5 percent (.015) on income taxable to
with a business the partner is conducting at least Illinois. Trusts pay both Illinois income and replacement
partially within Illinois. In that case, the partner would taxes.
include the income from the partnership with the
other income of the business as if the partner had
received the income directly, rather than through the
partnership.
For tax years prior to December 31, 2004, an
investment partnership and its partners are subject to
the same rules as other partnerships and partners. For
those years, any income passed through to a partner
from an investment partnership is taxable to Illinois as
indicated by the partnership on the Schedule K-1-P
that it issued to the partner. See 35 ILCS 5/1501(a)
(11.5) for more information.

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                                                                                 Pass-through Entity Information

Information for Pass-through Entities
Pass-through entities must pay pass-through                    (MeF) using third-party tax-prep software or mailed to 
withholding for their nonresident members (including           the address on the return.
corporations, S corporations, and partnerships) unless 
the pass-through entity is a partnership or S corporation      Does pass-through withholding or PTE tax credit 
who elects to pay PTE tax for all their members.               satisfy the Illinois tax liability for the member?
Pass-through withholding is the payment the pass-                                                   individual and 
                                                               Maybe. If a member is a nonresident 
                                                               the reported pass-through withholding or PTE tax credit 
through entity who does not elect to pay PTE tax makes 
                                                               satisfies the member’s Illinois income tax liability, then 
on behalf of all nonresident members who did not 
                                                               the member is not required to file an Illinois income tax 
submit Form IL-1000-E to the pass-through entity. PTE 
                                                               return. If the member has Illinois income from other 
tax is the payment the pass-through entity who elects 
                                                               sources or the pass-through withholding or PTE tax 
to pay PTE tax makes for all members based on their 
                                                               credit paid does not cover the member’s Illinois income 
distributive share of the pass-through entity’s income. 
                                                               tax liability, the member must file a return to report the 
A pass-through entity will pay pass-through withholding 
                                                               tax on all of the member’s Illinois income and claim a 
or PTE tax, but not both. A pass-through entity that 
                                                               credit for pass-through withholding or PTE tax paid. 
receives credit for pass-through withholding may use it 
to offset its PTE tax liability if they elect to pay PTE tax.  All Illinois residents who receive pass-through 
                                                               withholding or PTE tax credit must file an Illinois income 
Entities or individuals receiving a pass-through 
                                                               tax return regardless of whether the pass-through 
withholding credit or a PTE tax credit receive 
                                                               withholding or PTE tax credit satisfies the member’s 
Schedule K-1-P as a partner or shareholder or 
                                                               Illinois income tax liability.
Schedule K-1-T as a beneficiary in a pass-through 
entity. Any member that is a pass-through entity itself        What does Illinois do with the pass-through 
is required to report and pay pass-through withholding         withholding information received from pass-
on behalf of the pass-through entity’s own nonresident         through entities?
members on the income passed through to them 
                                                               The member information obtained from Schedule B 
unless they elect to pay PTE tax for all their members. 
                                                               or Schedule D is used to ensure that taxpayers who 
Members may claim credit on their own Illinois income 
                                                               received income from Illinois sources have filed the 
tax return for pass-through withholding reported and 
                                                               appropriate tax return and paid any required tax. 
paid on their behalf. Any entity receiving the PTE tax 
                                                               Taxpayers who have not filed an Illinois tax return, but 
credit that is not itself a pass-through entity, must report 
                                                               who should have, may receive a Non-filer Notice or 
the PTE tax credit in the payment section of its own 
                                                               a Notice of Proposed Tax Due. Penalties and interest 
return. If the entity receiving the PTE tax credit is itself a 
                                                               may be assessed according to Illinois law. If taxpayers 
pass-through entity, then the credit is passed through to 
                                                               do not respond to these notices, the tax, penalty, and 
its members based on each member’s distributive share 
                                                               interest will be deemed assessed, and the taxpayer will 
and reported on Schedule K-1-P or Schedule K-1-T. 
                                                               be referred for collection activity. Collection activity can 
In the case of a trust, if the PTE tax credit is retained 
                                                               result in property liens, frozen assets and accounts, and 
by the fiduciary the credit is reported in the payments 
                                                               wage garnishments.
section on its own return; however, if the credit is 
distributed to the beneficiaries, the credit is reported on    What if a pass-through entity overpays pass-
Schedule D of its own return and on each beneficiary’s         through withholding or PTE tax?
Schedule K-1-T. 
                                                               If a pass-through entity overpays pass-through 
What form(s) must the pass-through entity file?                withholding or PTE tax, the pass-through entity may 
                                                               request a refund. The members of the pass-through 
Partnerships file Form IL-1065, including Schedule B.
                                                               entity are allowed a credit only for their share of pass-
S corporations file Form IL-1120-ST, including                 through withholding or the calculated PTE tax due to 
Schedule B.                                                    the extent that the PTE tax was paid.
Trusts and Estates file Form IL-1041, including                A pass-through entity cannot amend a return merely 
Schedule D.                                                    to request a refund of any pass-through withholding 
All required supporting Illinois schedules must be             or PTE tax paid. In the case of any overpayment, the 
included with each return. These returns can be filed          member must file a timely claim for credit or refund of 
electronically through the Modernized e-File program           any pass-through withholding or PTE tax credit overpaid 
                                                               by the pass-through entity. 
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Pass-through Entity Information

Information for Members
Each pass-through entity that distributes pass- What other states have a substantially similar
through entity income and modifications and reports entity-level tax*?
pass-through withholding or PTE tax to IDOR is
also responsible for providing this information to State Specific state tax that qualifies
its members. For Illinois purposes, the partnership Alabama Ala. Code of 1975 § 40-18-24.4
or S corporation should issue a Schedule K-1-P Arizona Ariz. Rev. Stat. § 43-1014
and a Schedule K-1-P(2), showing the partner’s or Arkansas Ark. Code Ann. § 26-65-01
shareholder’s share of income and modifications,
California Cal. Rev. & Tax Code § 19900
and pass-through withholding or PTE tax credit, and
the fiduciary should issue a Schedule K-1-T and a Colorado Colo. Rev. Stat. § 39-22-340
Schedule K-1-T(2), showing the beneficiary’s share Connecticut Conn. Gen. Stat. § 12-699
of income and modifications, and pass-through Georgia GA. Code Ann. §§ 48-7-21(b)(7)(C)
withholding or PTE tax credit. and 48-7-23(b)
The pass-through entity listed on the front of Schedule Idaho Idaho Code Ann. § 63-3026B
K-1-P or Schedule K-1-T has completed and provided Louisiana LA. Rev. Stat. Ann. § 47:287.732.2
you with the schedule to reflect your specific share of Maryland MD. Code Ann. Tax-Gen. § 10-
the pass-through entity’s income and modifications, and 102.1
credits. Use the completed schedule you received and
Massachusetts ALM GL ch. 63D, § 2
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 Michigan MCL § 206.813
on your Illinois income tax return. Attach a copy of Minnesota Minn. Stat. Ann. § 289A.08(7a)
Schedule K-1-P or Schedule K-1-T to your tax return New Jersey N.J. Stat. Ann. § 54A: 12-3
and keep a copy for your records.
New York NY CLS Tax § 862
When is pass-through entity income, pass-through North Carolina Sessions Law 2021-180, SB 105
withholding, and PTE tax credit considered Oklahoma Okl. Stat. tit. 68, § 2355.1P-1
received?
Oregon 2021 Or. Laws Ch. 589 § 3
Pass-through entity income, modifications, pass- Rhode Island R.I. Gen. Laws § 44-11-2.3
through withholding, and PTE tax credit are considered
South Carolina S.C. Code Ann. § 12-6-545(G)
received on the last day of the pass-through entity’s
taxable year. Pass-through entity income and Wisconsin Wis. Stat. §§ 71.21(6) and
modifications, pass-through withholding, and PTE tax 71.365(4m)
credit are not considered received equally throughout *Information is current as of December 29, 2021, and
the year nor are they considered received on the last may be subject to change as more states add new
day of your tax year. The pass-through entity’s tax year legislation.
ending is listed at the top of the Schedule K-1-P or
Schedule K-1-T you received. Does the pass-through withholding or PTE tax
credit fulfill my Illinois tax liability?
Members need to be aware of how this affects their
Illinois income tax liability. The two instances when the Based on the information provided by the pass-
timing of the receipt of pass-through entity income and through entity and any other Illinois-based income,
modifications, pass-through withholding, and PTE tax you must determine your own Illinois tax liability. Use
credit are particularly important are Schedule K-1-P(2) or Schedule K-1-T(2) to determine
where to report the information from Schedule K-1-P or
• when determining estimated payments and
Schedule K-1-T on your Illinois income tax return. Any
• if the tax rate changes during your tax year.
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
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                                                                                         Pass-through Entity Information

Illinois income from other sources or the pass-through             Illinois residents must file their own Illinois income 
withholding or PTE tax credit paid does not cover your             tax returns and claim credit for any pass-through 
liability, then you must file a return to report the tax on        withholding or PTE tax credit reported to them.
all your Illinois income and claim a credit for the pass-
                                                                   Business entities that receive income from a pass-
through withholding or PTE tax credit. A nonresident 
                                                                   through entity are responsible for paying tax on that 
individual member may be able to take a credit for taxes 
                                                                   income.
paid to Illinois on the member’s home state’s tax return.

 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. 

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Pass-through Entity Information

Helpful Hints and Reminders

Partnerships and S corporations Members
File a return with a fully completed Schedule B listing all Any Illinois-sourced income is taxable in Illinois.
partners or shareholders.
If you receive one or more Schedules K-1-P or
Complete a Schedule K-1-P for each partner or Schedules K-1-T then you may have an Illinois tax
shareholder. liability. You must determine your own Illinois tax liability
and filing responsibility.
Mail the completed Schedule K-1-P to your partners or
shareholders in a timely manner and include a copy of If you did not receive Schedule K-1-P(2) or Schedule
Schedule K-1-P(2). K-1-T(2) to help you complete an Illinois income tax
return, see IDOR’s website at tax.illinois.gov to view
If your partners or shareholders contact you with
these instructions.
questions that you cannot answer, refer them to IDOR
or the partner’s or shareholder’s tax professional. If you received a Non-filer Notice or a Notice of
Proposed Tax Due from IDOR, you should respond
Do not accept Form IL-1000-E from an individual
within the time frame provided on the notice.
member.
If you have a paid tax preparer, complete and submit a
Fiduciaries Form IL-2848, Power of Attorney, so your preparer may
File a return with a fully completed Schedule D listing all respond to IDOR on your behalf.
beneficiaries.
If you did not receive a Schedule K-1-P or
Complete a Schedule K-1-T for each beneficiary. Schedule K-1-T from the pass-through entity, then you
Mail the completed Schedule K-1-T to your should contact the pass-through entity directly to obtain
beneficiaries in a timely manner and include a copy of the schedule.
Schedule K-1-T(2). Individual members may file using, IDOR’s MyTax
If your beneficiaries contact you with questions that you Illinois, our free online account management program at
cannot answer, refer them to IDOR or the beneficiary’s mytax.illinois.gov.
tax professional. Pass-through entity income, pass-through withholding
Do not accept Form IL-1000-E from an individual and PTE tax credit are considered earned on the last
member. day of the pass-through entity’s taxable year.

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                                                                                               Pass-through Entity Information

                                     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
15 Executive Drive                                                                             217 782-3336
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 Forms         Call us at 1 800 732-8866 or 217 782-3336.
                   Call our TDD (telecommunications device for the deaf) 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.   

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