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Illinois Department of Revenue

                                                                                     August 2022
Publication 130

Who is Required to Withhold Illinois Income Tax

The information in this publication      About this publication
is current as of the date of the         Publication 130, Who is Required to Withhold Illinois Income Tax, is about Illinois 
publication. Please visit our website at income tax withholding requirements. The objectives of this publication are to identify
tax.illinois.gov to verify you have the  •   who is an employer or payer;
most current revision.
                                         •   who is an employee or payee;
This publication is written in the plain 
                                         •   when withholding must occur;
English style so the tax information is 
easier to understand. As a result, we    •   other withholding requirements for payments of lottery or gambling winnings and 
                                             purchases of rights to lottery winnings;
do not directly quote Illinois statutes 
and the Illinois Administrative Code.    •   what forms you must give to employees, payees, and lottery or gambling winners; 
The contents of this publication are         and
informational only and do not take       •   what records you should keep.
the place of statutes, rules, and court 
decisions. For many topics covered 
                                         Related publications: 
in this publication, we have provided 
a reference to the applicable section    •  Publication 131, Withholding Income Tax Payment and Filing Requirements; 
or part of the Illinois Administrative   •  Booklet IL-700-T, Illinois Withholding Income Tax Tables, to calculate withholding; 
                                         •  Publication 110, W-2, W-2c, W-2G, and 1099 Filing and Storage Requirements for 
Code for further clarification or more       Employers and Payers, including New 1099-K Electronic Filing Requirements; and
detail. All of the sections and parts    •  Publication 121, Illinois Income Tax Withholding for Household Employees.
referenced can be found in Title 86 of 
the 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 the 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 OFFICE                                  
ILLINOIS DEPARTMENT OF REVENUE                              
PO BOX 19014
SPRINGFIELD IL  62794-9014

Get Illinois Department of Revenue forms and information at tax.illinois.gov

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Who is Required to Withhold Illinois Income
Contents
General Information
Who is required to withhold Illinois Income Tax? ............................................................................ 2
Who is an employer or payer? ........................................................................................................ 3
Who is an employee or payee? ....................................................................................................... 3
Must I register to withhold Illinois Income Tax? .............................................................................. 3
What happens after I register? ....................................................................................................... 3
What should I do if I move or change my business name? ............................................................. 3
What should I do if I sell or transfer ownership of my business? .................................................... 3
What if I no longer have employees or payees from whom I withhold Illinois Income tax or my
business has closed? ..................................................................................................................... 3
What if I am a seasonal employer? ................................................................................................ 3

Withholding Illinois Income Tax for My Employees
When must I withhold Illinois Income Tax from my employee’s compensation? ............................ 4
When is compensation paid in Illinois? ........................................................................................... 4
When am I not required to withhold Illinois Income Tax? ............................................................... 5
Am I required to withhold income tax for another state if my employee is not an Illinois resident? 6
What forms must my employee complete? ..................................................................................... 6
Do I owe other Illinois employment taxes?...................................................................................... 7
What forms must I give my employee? ........................................................................................... 7
What forms must I submit to the Illinois Department of Revenue? ................................................. 7
How do I complete Form W-2 for my employee showing income and withholding for Illinois? ....... 8
How do I complete Form W-2G or Form 1099 for my payee showing withholding for Illinois? ....... 8

Withholding Illinois Income Tax for Lottery or Gambling Winnings
When must I withhold Illinois Income Tax from lottery winnings? ................................................... 9
When must I withhold Illinois Income Tax from gambling winnings? .............................................. 9
What forms must a winner complete? ............................................................................................ 9
What forms must I give each recipient? .......................................................................................... 9
What forms must I submit to the Illinois Department of Revenue? ................................................. 10
What if the due date falls on a weekend or state recognized holiday? ........................................... 10
Where do I get help? ....................................................................................................................... 10

Withholding Illinois Income Tax for Purchases of the Rights to Lottery Winnings
Do I have an obligation to withhold Illinois Income Tax from purchased lottery winnings? ............ 10
When must I withhold Illinois Income Tax from purchased lottery winnings? ................................. 10
Illinois Income Tax Forms for Determining Withholding from Employees and Lottery
or Gambling Winners ............................................................................................................................ 11
Office locations ...................................................................................................................................... 12

General Information
• non-wage income such as pensions, annuities, employment
Who is required to withhold Illinois
income, and sick pay, that you have agreed to voluntarily
Income Tax? withhold, usually reported to a recipient on Form 1099,
Generally, you must withhold Illinois Income Tax from payments • gambling winnings greater than $5,000 from an Illinois casino
you make for or race track, including sports wagering winnings, from which
• employee compensation (i.e., wages and salaries including you are required to withhold federal income tax, usually
bonus, overtime, and commission pay) that is paid in Illinois reported to a payee on Form W-2G,
and from which you are required to withhold federal income • Illinois lottery winnings of $1,000 or greater usually reported to
tax, usually reported to a payee on Form W-2, a payee on Form W-2G, or

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                                                                                    Who is Required to Withhold Illinois Income 

General Information (continued from Page 2)

•  the purchase of the rights to Illinois lottery winnings, usually 
                                                                    Must I register to withhold Illinois 
   reported to the purchaser on Form 1099-MISC.
However, there are some situations that do not require you to       Income Tax?
withhold Illinois Income Tax. See “When am I not required to        If you are required to or voluntarily withhold Illinois Income 
withhold Illinois Income Tax?” for more information. We do not      Tax for your Illinois employees or payees, you must register 
require a separate agreement for payments covered by a federal      with IDOR and tell us the date your Illinois payroll will begin. 
voluntary withholding agreement. If requested by a payee,           Exception: Household employers should refer to Publication 121, 
you can enter into a voluntary agreement and withhold Illinois      Illinois Income Tax Withholding for Household Employees.
Income Tax on Illinois income such as individual retirement 
accounts (IRAs) or pensions. Note: If you agree to a voluntary      To register your business you have the following options: 
withholding agreement then you are required to withhold Illinois    • register electronically with the online Illinois Business 
income tax.                                                           Registration Application on MyTax Illinois (registration 
          As a withholding agent (person who withholds income         confirmation generally available in 1-2 days) at tax.illinois.gov,
   tax), you are liable for the taxes that you are required to      • complete and mail Form REG-1, Illinois Business Registration 
   withhold and that you volunteer to withhold. Because we            Application (registration confirmation generally available in 6-8 
   are required to collect taxes (and issue assessments when          weeks) and any necessary schedules, or
   these taxes are not paid), Illinois law states that the amounts  • visit one of our regional offices (see Page 12). 
   required to be withheld and paid to us (and any penalties        You will receive a temporary tax account number unless you already 
   and interest) are considered to be a tax on you.                 have received your federal employer identification number (FEIN).

Who is an employer or payer?                                        What happens after I register?
You are an employer if you are any of the following:                If you are a new registrant you are assigned to the monthly payer 
•  a person or organization who has an office or transacts          and quarterly return schedule.  See Publication 131, Withholding 
   business in Illinois for whom a worker performs a service        Income Tax Payment and Filing Requirements. Visit our website at 
   as an employee and you are the person who is liable to           tax.illinois.gov for more information regarding our electronic options. 
   withhold and pay federal income taxes to the Internal 
   Revenue Service (IRS).                                           What should I do if I move or change my 
•  a person or organization who has an office or transacts          business name? 
   business in Illinois and who has control of the payment of       If your business name or address has changed from your last 
   wages for employee services, if the employer does not have       return without changing owners, check the appropriate box on Form 
   control of the payment of wages.                                 IL-941, Step 1, and enter your new business name and address in 
•  a payer who has an office or transacts business in Illinois      Step 1. File your completed return (Form IL-941) by its due date.  
   and who makes payments from which federal income taxes           You also can make changes to your business name by completing 
   are withheld (e.g., gambling or lottery winnings).               and submitting Form REG-3-C, Business Information Update, and 
You are a payer if you are any of the following:                    updates to your address on MyTax Illinois.  
  •  a person or organization who pays non-wage income such 
                                                                    What should I do if I sell or transfer 
   as pensions, annuities, employment income, and sick pay, 
   that you have agreed to voluntarily withhold;                    ownership of my business?
  •  a person or organization that pays gambling or lottery         If you sell or transfer your business, you must file a final 
   winnings; or                                                     return (Form IL-941) at the end of the final filing period.                                                                                   
  •  a person or organization who purchases the rights to lottery   You may also be required to file Form CBS-1, Notice of Sale, 
   winnings.                                                        Purchase, or Transfer of Business Assets, at least 10 days prior to 
See IRS Publication 15 Circular E, Employer’s Tax Guide, for        the sale. 
more information.
                                                                    What if I no longer have employees or 
Who is an employee or payee?                                        payees from whom I withhold Illinois 
An employee is either
                                                                    income tax or my business has closed?
•   a person who performs services subject to the legal control 
                                                                    If your business has permanently stopped withholding because it 
   and direction of an employer, or
                                                                    has closed or you no longer pay wages, complete Step 2, Line B, on 
•   an Illinois resident who receives payments on which federal     Form IL-941, check the box to indicate that this is a final return, and 
   income tax is withheld by the employer.                          enter the date you stopped paying wages. You also can cease your 
A payee is a person who receives non-wage income, gambling          account on MyTax Illinois.
or lottery winnings, or a lump sum payment for rights to lottery 
winnings.
See IRS Publication 15 Circular E, Employer’s Tax Guide, for 
more information.

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                                                                                      Who is Required to Withhold Illinois Income 

Withholding Illinois Income Tax for My Employees
                                                                       as decisive in determining whether such service is incidental  
What if I am a seasonal employer?
                                                                       to service performed within Illinois.
If you are a seasonal business and have ceased paying wages 
temporarily (e.g., you will be rehiring employees during the next     3.   If the employee is an Illinois resident and 
year), continue to file your returns. Even if you do not pay any       •    neither of the rules above apply and
wages or withhold any tax, you still must file Form IL-941 and 
complete a Schedule P, Illinois Withholding Schedule, for each         •    no other state’s taxes are withheld, 
reporting period. If you had no withholding for the filing period,     then compensation is considered paid in Illinois and is 
report zero on Line 2 of Form IL-941 and on the Schedule P, enter      subject to Illinois income tax withholding.
your business name, FEIN, and zeros in both the income and            4.  If the employee’s compensation is 
withholding columns. 
                                                                       •    not localized to any state under any of the rules above 
When must I withhold Illinois Income Tax                                    and 
from my employee’s compensation?                                       •    the employee performs significant service within Illinois 
You must withhold Illinois Income Tax when you withhold federal             for more than 30 working days, and 
income tax from compensation you paid in Illinois. Compensation        •    the service performed within Illinois is nonincidental to 
is paid in Illinois when the employee’s services are “localized” in         the employee’s service performed outside Illinois, 
Illinois .This statement applies to all individuals except qualifying  then a portion of compensation is considered paid in Illinois 
residents of Iowa, Kentucky, Michigan, and Wisconsin, and              and subject to Illinois income tax withholding. The portion of 
military spouses. For further information, see “When am I not          compensation subject to Illinois withholding equals the total 
required to withhold Illinois Income Tax?”                             compensation paid to the employee multiplied by a fraction 
                                                                       equal to the number of working days the employee spent 
When is compensation paid in Illinois?                                 within Illinois during the year divided by the total working 
The following are general rules for when compensation is               days of the year. 
paid in Illinois.
                                                                       “Working day” means all days during the tax year in which 
1.  If the employee’s service is localized in Illinois because all     the individual performs duties on behalf of his or her 
 of the service is performed in Illinois, then compensation is         employer. Days in which the individual performs no duties on 
 considered paid in Illinois and subject to Illinois income tax        behalf of his or her employer (e.g., weekends, vacation days, 
 withholding.                                                          sick days, and holidays) are not working days. 
2.  If some of the employee’s services are performed outside           A working day is spent within Illinois if: 
 Illinois, but the services outside Illinois are incidental to 
 the services performed inside Illinois, then compensation is          • the individual performs service on behalf of the employer 
 considered paid in Illinois and subject to Illinois income tax          and a greater amount of time on that day is spent by the 
 withholding.                                                            individual performing duties on behalf of the employer 
                                                                         within Illinois, without regard to time spent traveling, than 
 The term “incidental” means any service which is necessary              is spent performing duties on behalf of the employer 
 to or supportive of the primary service performed by the                outside of Illinois; or
 employee or which is temporary or transitory in nature or 
 consists of isolated transactions. The incidental service may         • the only service the individual performs on behalf of the 
 or may not be similar to the individual’s normal occupation so          employer on that day is traveling to a destination within 
 long as it is performed within the same employer-employee               Illinois, and the individual arrives on that day. 
 relationship. That is, an individual who normally performs            Example: Mary is an Missouri resident who earned $60,000 
 all of his service in Illinois may be sent by his employer to         in wages from her employer for the tax year. During the 
 another state to perform service which is totally different in        year, she performed services for her employer for 35 days in 
 nature from his usual work or he may be sent to do similar            Illinois out of 250 total working days for the year. Accordingly, 
 work. So long as the service is temporary or consists merely          14 percent (35 working days divided by 250) of Mary’s 
 of isolated transactions, it will be considered to be incidental.     wages, or $8,400, was paid in Illinois and is subject to Illinois 
 In every case, the ultimate determination to be made is               income tax withholding. 
 •   whether the individual’s service was intended to be and           Working days spent within Illinois do not include any day in 
          was in fact principally performed within Illinois and        which the employee is performing services in Illinois during 
 •   whether any service which was performed in another                a disaster period solely in response to a request made to his 
          state was of a temporary or transitory nature or arose       or her employer by the government of Illinois, by any political 
          out of special circumstances at infrequent intervals.        subdivision of Illinois, or by a person conducting business in 
                                                                       Illinois to perform disaster or emergency-related services in 
 The amount of time spent or the amount of service                     Illinois. 
 performed outside Illinois, in itself, should not be regarded  

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                                                                                       Who is Required to Withhold Illinois Income 

 “Declared State disaster or emergency” means a disaster or        Examples of compensation paid in Illinois:
 emergency event 
                                                                     1 Your company employs an Indiana resident to make sales 
 •       for which a Governor’s proclamation of a state of             for your company. You control your employee’s services, 
         emergency has been issued; or                                 all of which are performed in Illinois. Compensation is 
 •       for which a Presidential declaration of a federal major       paid in Illinois because all of your employee’s services are 
         disaster or emergency has been issued.                        performed in Illinois. 
 “Disaster period” means a period that begins 10 days prior          2 Your airline company employs a Missouri resident to 
 to the date of the Governor’s proclamation or the President’s         fly to various destinations in the United States. Your 
 declaration (whichever is earlier) and extends for a period           employee reports to and flies out of a terminal in Illinois. 
 of 60 calendar days after the end of the declared disaster or         According to your records, 58 percent of your employee’s 
 emergency period.                                                     compensation (flight time in Illinois versus flight time to 
 “Disaster or emergency-related services” means repairing,             other destinations) is earned in Illinois. Therefore, you must 
 renovating, installing, building, or rendering services               withhold Illinois Income Tax on compensation paid in Illinois 
 or conducting other business activities that relate to                to this employee because more than 50 percent of your 
 infrastructure that has been damaged, impaired, or                    employee’s compensation was earned in Illinois. Illinois 
 destroyed by the declared State disaster or emergency.                flight miles do not include miles flown over Illinois without 
 “Infrastructure” means property and equipment owned or                taking off or landing. 
 used by a public utility, communications network, broadband 
 and internet service provider, cable and video service            When am I not required to withhold 
 provider, electric or gas distribution system, or water           Illinois Income Tax?
 pipeline that provides service to more than one customer or 
                                                                   Unless you enter into a voluntary withholding income tax 
 person, including related support facilities. “Infrastructure” 
                                                                   agreement, you are 
 includes, but is not limited to, real and personal property                           not required to withhold Illinois Income Tax 
 such as buildings, offices, power lines, cable lines, poles,      from the following: 
 communications lines, pipes, structures, and equipment            •   compensation paid to residents of Iowa, Kentucky, 
5.  For compensation for services performed by a nonresident           Michigan, and Wisconsin (due to reciprocal agreements 
 as a member of a professional athletic team, the amount               with each of these states);
 that is paid in Illinois is the total compensation for services   •   compensation paid to a non-military employee whose 
 performed for the team during the year, multiplied by a               spouse is in the military, both of whom are residents of the 
 fraction equal to the number of duty days spent within Illinois       same state (other than Illinois), and are only in this state be-
 by the total number of duty days spent performing services            cause the spouse is stationed here by the military or where 
 for the team. See Section 304(a)(2)(B)(iv) of the Illinois            the non-military spouse does not live in the same state as 
 Income Tax Act (IITA) for more guidance.                              the servicemember but elects to use their servicemember 
                                                                       spouse’s state of residence for tax purposes as allowed by 
Limited exceptions to the above rules: 
                                                                       the Veterans Benefits and Transition Act of 2018;
There are three limited exceptions when you are not required to 
withhold Illinois Income Tax. These exceptions are described as    •   compensation paid to a non-resident employee who has 
follows.                                                               performed less than 31 days of service in Illinois and whose 
                                                                       compensation is not localized in Illinois under paragraphs 
1.  The employee works for an employer under the                       one and two in the section “When is compensation paid in 
 jurisdiction of the Surface Transportation Board (STB)                Illinois?” 
 and performs regularly assigned duties in more than 
 one state. Do notwithhold Illinois Income Tax unless the          •   compensation paid to a non-resident employee whose 
 employee is an Illinois resident.                                     service is performed entirely in another state; 
                                                                   •   compensation paid to an Illinois resident whose service is 
2.  The employee works on an aircraft for an air carrier 
 and performs regularly assigned duties in more than                                                        and the compensation is 
                                                                       performed entirely in another state, 
 one state. Do not withhold Illinois Income Tax unless the             subject to withholding in another state; 
 employee is an Illinois resident, or, if the employee is not an   •   qualifying payments made for personal service contracts or 
 Illinois resident, the employee earns more than 50 percent            prizes awarded from contests conducted in Illinois (Sections 
 of the compensation in Illinois (Illinois flight miles versus all     1405.2 and 1405.3 of the IITA);
 flight miles). Illinois flight miles do not include miles flown   •   compensation that will not be included in the recipient’s 
 over Illinois without taking off or landing.                          base  income (e.g., annuity payments received from qualified 
3.  The employee works on a vessel and performs regularly              employee benefit plans);
 assigned duties in more than one state. Do not withhold           •   payments subject to withholding under IRC, Sections 3405 
 Illinois Income Tax unless the employee is an Illinois                or 3406; 
 resident.

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Who is Required to Withhold Illinois Income
• compensation paid by an employer under the jurisdiction
Am I required to withhold income tax for
of the Surface Transportation Board (STB), rail and motor
carriers, to a nonresident employee who performs regularly another state if my employee is not an
assigned duties in more than one state; Illinois resident?
• nonresident employees who work on aircraft for an air carrier, If your employee is “paid in Illinois” and is a resident of Iowa,
perform regularly assigned duties in more than one state, Kentucky, Michigan, or Wisconsin, you may, but are not required
and do not earn more than 50 percent of the by Illinois law, withhold income tax for the other state.
compensation in Illinois (Illinois flight miles versus all flight
If your employee is a resident of a state with whom Illinois does
miles). Illinois flight miles do not include miles flown over
not have a reciprocal agreement, you must withhold Illinois
Illinois without taking off or landing;
Income Tax on all income that is paid in Illinois. You may be
• compensation paid to a master or seaman on a vessel in the required to withhold tax for another state in which the employee
foreign, coastwise, intercoastal, interstate, or noncontiguous works or resides. You should contact those states to determine if
trade, or an individual employed on a fishing vessel or any you are required to register as a withholding agent.
fish processing vessel;
• compensation paid to an employee whose compensation is What forms must my employee
exempt from federal withholding requirements (e.g., “wages” complete?
paid to certain types of ministers); or Form IL-W-4
• compensation paid to household employees as defined by Your employee must complete Form IL-W-4, Employee’s Illinois
the IRS. (For more information, visit www.irs.gov and refer to Withholding Allowance Certificate. This is your record of the
IRS Publication 926.) Note: Pursuant to a voluntary federal number of allowances that your employee is entitled to claim and
agreement, if you withhold federal income tax from your would only be disregarded for the following circumstances:
household employees, Illinois withholding is required. Also,
you may enter a voluntary Illinois withholding agreement. If • An employee claims total exemption from Illinois Income Tax
you do withhold Illinois income tax, you may report and pay withholding, but has not filed a federal Form W-4, Employee’s
these taxes annually on Form IL-1040, Illinois Individual Withholding Certificate, claiming total exemption.
Income Tax Return, Line 20 (No registration is required), • The IRS has instructed you to disregard the employee’s
or you may file Form IL-941 quarterly (requires registration federal Form W-4.
as a withholding agent). For more detailed information, If a completed Form IL-W-4 is not filed, or you are required to
see Publication 121, Illinois Income Tax Withholding for disregard Form IL-W-4, you must withhold Illinois Income Tax with
Household Employees. no allowances.
Examples for when withholding is not required. Most retirement income is exempt from Illinois
1 Your company, headquartered in Missouri, hires an Illinois Income Tax and no withholding is required, even if federal
resident to install computer networks for your Missouri- income tax is withheld. However, retired taxpayers may
based clients. Your employee travels to your clients’ branch wish to enter into voluntary withholding agreements to avoid
offices in Illinois to complete network installation for a total having to pay estimated taxes on their taxable income.
of 20 working days. Compensation is not paid in Illinois Retired taxpayers who enter into such voluntary withholding
because your company headquarters/base of operations agreements must also complete Form IL-W-4.
is in Missouri and your employee performed services in If an employee claimed exemption from withholding on federal
Illinois for less than 31 working days. Therefore, you do not Form W-4, you still may be required to withhold Illinois Income Tax
withhold Illinois Income Tax. (See the note below.) if the employee’s pay is greater than the Illinois allowance amount.
2 Your company’s main office is in Indiana. You employ an See the example below.
Illinois resident to honor copy machine routine maintenance Before December 1 of each year, have your employee review
contracts. Your employee works out of the main office and his or her Form IL-W-4. If your employee’s Illinois withholding
has clients in both Illinois and Indiana. Your employee spent allowances change, the employee must complete a new Form
21 working days in Illinois. You are not required to withhold IL-W-4.
Illinois Income Tax because your employees spent less than
31 working days in Illinois. (See the note below.) Example:
Although in these two examples you are not Sam is single, does not have any dependents, and cannot be
required to withhold Illinois Income Tax, your employees’ claimed on another person’s tax return. He works for you part-
income will be taxed by Illinois because they are Illinois time. Sam expects to earn $4,000 this year.
residents. Therefore, your employees will file returns in Last year Sam earned $3,000, did not have a federal tax liability,
both states. We will give your employees a credit for and received a total refund of the federal income tax that was
taxes paid to the other state. If the amount of tax paid withheld from his pay. Sam does not expect to owe any federal
to the other state does not cover the Illinois tax liability, income tax this year. Therefore, he claims exemption from
your employees may need to make estimated income withholding on his federal Form W-4 for this year.
tax payments to Illinois.

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                                                                                     Who is Required to Withhold Illinois Income 
Although Sam may not owe federal income tax, he will owe           for income tax purposes among all states in which the 
Illinois Income Tax because he is entitled to only one withholding employee performs services. 
allowance. The exemption for this allowance is less than his total You are not required to submit this form to IDOR. You must, 
pay. Therefore, you must withhold Illinois Income Tax from Sam’s   however, keep this information in your records and provide it 
pay.                                                               upon request.
Form IL-W-5
Form IL-W-5, Certificate of Residence in Illinois, is completed by 
an Illinois resident (not your employee) with whom you have a      Do I owe other Illinois employment 
written contract who                                               taxes?
• is paid for performing personal services (e.g., artistic or      Check with the Illinois Department of Employment Security 
  musical performances, or professional consulting services)       (IDES) for more information about unemployment insurance 
  and the income earned is taxable under Section 1405.2 of         contributions for employers. Visit ides.illinois.gov or call the IDES 
  the IITA, or                                                     Employer Hotline at 1 800 247-4984. 
• receives payment for prizes and awards from a contest 
  conducted entirely in Illinois (e.g., game shows, amateur 
  talent contests, dog or horse shows) and the income earned       What forms must I give my employee? 
  is taxable under Section 1405.3 of the IITA.                     Before January 31 of each year, you must give your employee 
You are not required to provide annual information reports of      three copies of federal Form W-2,Wage and Tax Statement, or, 
the amounts you pay in either of these situations. You must,       if applicable, any version of Form 1099 (e.g., Form 1099-MISC, 
however, keep this information in your records and provide it to   Form 1099-INT, Form 1099-R). 
us if we request. 
                                                                   If your employee permanently discontinues employment before 
          Instead of completing Form IL-W-5, the recipient         the close of the calendar year or you terminate a federal 
     may file a certificate of in-state residence on any invoice,  voluntary withholding agreement, you must give the employee 
     billing statement, or contest application submitted to the    (or other person receiving payments subject to withholding) a 
     withholding agent.                                            completed federal Form W-2 within 30 days of the last payment 
Form IL-W-5-NR                                                     for which withholding was required. You must keep records of 
To be exempt from Illinois Income Tax withholding requirements     all employment records, including undeliverable Forms W-2 
you must complete Form IL-W-5-NR, Employee’s Statement of          and Forms 1099, for at least four years after the date you are 
Nonresidence in Illinois, if                                       required to give the form to the employee. 
•    you are a resident of a state (Iowa, Kentucky, Michigan, and  
  Wisconsin) with whom Illinois has a reciprocal agreement, or 
                                                                   What forms must I submit to the Illinois 
•    your spouse is in the military, you and your spouse are 
  both residents of the same state (other than Illinois), and      Department of Revenue?
  you are in Illinois only because your spouse is stationed        You are required to electronically file Form IL-941, Illinois 
  here by the military or you do not live in the same state as     Withholding Income Tax Return, quarterly. See Publication 131, 
  your servicemember spouse, but you have elected to claim         Withholding Income Tax Payment and Filing Requirements for 
  their state of residence for tax purposes as allowed by the      more information. 
  Veterans Benefits and Transition Act of 2018.                    You are required to electronically submit Forms W-2, W-2c, and 
If your employee does not complete this form, you must withhold    W-2G to the Illinois Department of Revenue by January 31.  
Illinois Income Tax. If your employee moves out of the state 
                                                                   If you are unable to file these forms, or Form IL-941, 
of residence designated on the original Form IL-W-5-NR, the 
                                                                   electronically, you may request Form IL-900-EW, Waiver 
employee must notify you of the change within 10 days and file a 
                                                                   Request, through our Taxpayer Assistance Division at 
new Form IL-W-5-NR, if applicable.
                                                                   1 800 732-8866 or 217 782-3336. The Waiver Request must 
Form IL-W-6 and Worksheet                                          be completed and submitted back to the Department.  You 
Form IL-W-6, Certificate of Days Worked in Illinois for Non-       will be notified if the Waiver Request is approved or denied.  
Residents, is completed by a non-resident who is paid for          See Publication 110, W-2, W-2c, W-2G, and 1099 Filing and 
performing services within Illinois for more than 30 working days  Storage Requirements for Employers and Payers, for additional 
during the taxable year on your employer’s behalf.                 information.
Employers are required to have a copy of the certificate and 
worksheet on file for each non-resident employee who is 
expected to work more than 30 working days in Illinois and you 
do not maintain a time and attendance system which 
•    requires the employee, on a contemporaneous basis, to 
  record the work location for every day worked outside of the 
  state where the employment duties are primarily performed; 
•    and allows the employer to allocate the employee’s wages 

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                                                                       Who is Required to Withhold Illinois Income 

How do I complete Form W-2 for my employee showing income and withholding for 
Illinois?
For Illinois purposes when completing Form W-2,  Box 16, enter the amount of wages paid in Illinois or paid to an Illinois resident 
employed in a reciprocal state (Iowa, Kentucky, Michigan, or Wisconsin), under the rules in the section “When is compensation 
paid in Illinois?”even if you withheld other states’ tax on some of those wages or withheld Illinois tax on a different amount. If none 
of the employee’s wages were paid in Illinois or for an Illinois resident’s employment in a non-reciprocal state, report zero in Box 16 
even if you withheld Illinois income tax from those wages. Illinois residents who pay income tax to other states need this information 
in order to correctly compute the credit allowed for those taxes.  Make sure that the sum of the state wages in Box 16 are equal to 
Box 1.
Example 1: Tom is an Illinois resident who works only in Indiana (a non-reciprocal state). His employer is voluntarily withholding 
Illinois taxes because the Schedule CR credit Tom receives from his Indiana income will not cover his Illinois tax liability. His gross 
wages are $33,165. The Form W-2 should be completed as follows:

IN        36-XXXXXXX                $33,165                     $994.95

IL           36-XXXXXXX             $0                    $829.13
                                                                       S A M P L E

How do I complete Form W-2G or Form 1099 for my payee showing withholding for 
Illinois?
For Illinois purposes when completing federal Forms W-2G, or any Forms 1099, you must include any Illinois income tax withheld 
on the line for “State income tax withheld” or “State tax withheld.”  Follow the Instructions for the form.  Make sure to use the 
prefix “IL.”

Form W-2G sample:   

                      IL  36-XXXXXXX    2000.00

                            S A M P L E
                      50.00

Form 1099-MISC sample: 

                      S A M P L E

                  50.00                               IL 36-XXXXXXX                       2000.00

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                                                                                    Who is Required to Withhold Illinois Income 

Form 1099-R sample:                       

                                   50.00          IL  36-XXXXXXX                           2000.00

                                             S A M P L E

Form 1099-INT sample:

                                                S A M P L E
  S A M P L E

                                                IL        36-XXXXXXX                50.00

Withholding Illinois Income Tax for Lottery or Gambling 

Winnings
                                                                  Bingo and slot machine winnings are subject to federal 
When must I withhold Illinois Income 
                                                                  withholding requirements for amounts of $1,200 or more. 
Tax from lottery winnings?                                        Winnings from keno of $1,500 or more also are subject to federal 
You must withhold Illinois Income Tax each time you make a        withholding requirements. See 26 USCA 3402(q) of the Internal 
single payment of Illinois lottery winnings of $1,000 or more.    Revenue Code and the IRS’ instructions for federal Forms 5754 
It does not matter that several individuals may jointly hold the  and W-2G for more information.
winning ticket and each person’s “share” is less than $1,000. 
You must withhold Illinois Income Tax for both residents and      What forms must a winner complete?
nonresidents.                                                     Each time you pay Illinois lottery winnings of $1,000 or more or 
                                                                  gambling winnings of more than $5,000 in a single payment, 
When must I withhold Illinois Income                              the winner must complete Form IL-5754, Statement by Person 
Tax from gambling winnings?                                       Receiving Gambling Winnings. This form helps you identify 
You must withhold Illinois Income Tax from gambling winnings,     which winners are Illinois residents. Keep this form in your 
                                                                  records to show who received winnings and to whom the 
including sports wagering winnings, you pay any time the 
                                                                  winnings are taxable. You will use this information when you 
winnings are subject to federal income tax withholding 
                                                                  prepare federal Form W-2G. 
requirements and are not subject to another state’s withholding 
requirements. 
                                                                  What forms must I give each recipient?
In general, winnings that currently are subject to federal income 
                                                                  By January 31 of each year, you must give each recipient two 
tax withholding include proceeds of more than $5,000 in a single  copies of federal Form W-2G. 
payment from 
                                                                      You must keep any undeliverable Form W-2G for at 
• a wager placed in a sweepstakes, wagering pool, or lottery         least three years after the date you are required to give the 
  (other than a state-conducted lottery); or                         form to the recipient.
• all other wagering transactions, including a wagering 
  transaction in a parimutuel pool with respect to horse races, 
  dog races, or jai alai, if the amount of the proceeds is at 
  least 300 times as large as the amount wagered. 
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Who is Required to Withhold Illinois Income
What forms must I submit to the Illinois What if the due date falls on a
Department of Revenue? weekend or state recognized holiday?
You are required to Any time a due date falls on a weekend or state recognized
• electronically submit Form W-2G to Illinois Department of holiday, we adjust the due date to the next business day.
Revenue by January 31.
• electronically file Form IL-941, Illinois Withholding Income Where do I get help?
Tax Return, quarterly. See Publication 131 for more • Visit our website at tax.illinois.gov
information on filing and payment requirements. • Call us at 1 800 732-8866 or 217 782-3336
If you are unable to file your forms electronically, you may • Call our TDD (telecommunications device for the deaf) at
request Form IL-900-EW, Waiver Request, through our Taxpayer 1 800 544-5304
Assistance Division at 1 800 732-8866 or 217 782-3336. The • Write to
Waiver Request must be completed and submitted back to ILLINOIS DEPARTMENT OF REVENUE
IDOR. You will be notified if the Waiver Request is approved or PO BOX 19001
denied. SPRINGFIELD IL 62794-9001

Withholding Illinois Income Tax for Purchases of the

Rights to Lottery Winnings

Do I have an obligation to withhold When must I withhold Illinois Income Tax
Illinois Income Tax from purchased from purchased lottery winnings?
lottery winnings? You must withhold Illinois Income Tax at the time you purchase
You must withhold Illinois Income Tax from the purchase price of the lottery rights. You must register and report the withholding
rights to future Illinois lottery winnings that you purchased from for each purchase on Form IL-941. For more information, refer
another entity. The Illinois Lottery notifies us of the purchase to Informational Bulletin FY 2014-08. The tax is withheld at the
and we send instructions to you on how to remit the Illinois current income tax rate.
withholding to us. Make sure to follow the instructions you are
sent and use the account number we assign to you.

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                                                                                      Who is Required to Withhold Illinois Income 

Illinois Income Tax Forms for Determining Withholding 

from Employees and Lottery or Gambling Winners

       Forms completed by employees and lottery or gambling winners
If                                                            employee/payee      and for Illinois purposes,             
                                                              completes           you withhold 

you withhold federal income tax for an employee or other  
whose compensation is paid in Illinois                        Form IL-W-4    based on the number of allowances claimed. 
you enter into a voluntary withholding agreement with  
your employee or payee                                        Form IL-W-4    based on the number of allowances claimed. 
you pay an Illinois resident for personal services, and the  
income is reportable under Section 1405.2 of the               
Illinois Income Tax Act                                       Form IL-W-5    zero.
you pay an Illinois resident prizes or awards from a contest  
entirely in Illinois and the income earned is reportable       
under Section 1405.3 of the Illinois Income Tax Act           Form IL-W-5    zero.    
your employee is a resident of Iowa, Kentucky,  
Michigan, or Wisconsin or is a nonresident spouse of a 
military servicemember and is only in Illinois because 
the servicemember is stationed here                           Form IL-W-5-NR zero.
  you are a non-resident Illinois employee 
  and you expect to perform non-incidental services 
  for more than 30 working days within Illinois on your 
  employer’s behalf during the calendar year                  Form IL-W-6    based on the number of allowances claimed. 

you pay lottery winnings of $1,000 or more 
to an Illinois resident or nonresident                        Form IL-5754   the full rate of tax (no exemptions).  
you pay gambling winnings of more than $5,000, including 
sports wagering winnings, provided the payment is 
subject to federal withholding.                               Form IL-5754   the full rate of tax (no exemptions).

you purchase rights to Illinois Lottery Winnings and withhold   none         the full rate of tax (no exemptions).
Illinois income tax from the purchase price
       You must keep a copy of these forms in your records. By January 31 of each year, you must give your employee  
       three copies of federal Form W-2, Wage and Tax Statement. If you withheld from gambling winnings, you must give  
       each recipient two copies of federal Form W-2G. 
      You must submit your Forms W-2, W-2c, and W-2G electronically to the Illinois Department of Revenue by        
       January 31. 
      For the current tax rate, refer to the Tax Rate Database on our website.

       For additional withholding tax information, refer to these related publications: 
       •  Publication 131, Withholding Income Tax Payment and Filing Requirements
       •  Booklet IL-700-T, Illinois Withholding Income Tax Tables
       •  Publication 110, W-2, W-2c, W-2G, and 1099 Filing and Storage Requirements for 
       Employers and Payers, including New 1099-K Electronic Filing Requirements
       •  Publication 121, Illinois Income Tax Withholding for Household Employees

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                                                                                  Who is Required to Withhold Illinois Income 

Office Locations

                                     Suburban North Regional Building
                                     9511 Harrison Street FA 203
                                     Des Plaines, Illinois 60016-1563

200 South Wyman Street
Rockford, Illinois 61101-1237                                                     555 West Monroe Street
                                                                                  Suite 1100
                                                                                  Chicago, Illinois 60661-3605

                                                                                  Willard Ice Building
                                                                                  101 West Jefferson
                                                                                  Springfield, Illinois 62702-5145

15 Executive Drive
Business Center One, Suite 2
Fairview Heights, Illinois 62208-1331

                    2309 W. Main, Suite 114
                    Marion, Illinois 62959-1196

Contact Information Visit our website at tax.illinois.gov. For specific phone number and email contacts, see our 
                         Contact Us page. 
                    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 19001, Springfield, IL  62794-9001.
                    Call our 24-hour Forms Order Line at 1 800 356-6302. 

              Printed by authority of the state of Illinois - web only, one copy. 
Page 12 of 12                                                                                           PUB-130 (R-08/22)

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