Tuesday, November 29, 2022

How To Pay Illinois State Taxes

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Illinois Property Tax Records

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In the United States, property taxes are levied by local governments and collected by state governments. In Illinois, property tax records are maintained by the Illinois Department of Revenue. The Department of Revenue is responsible for assessing and collecting property taxes for all of the counties in Illinois.

What Snowbirds Need To Know If They Want To Fly Away From Illinois Taxes

Another Chicago winter is coming to a close. That means another spring full of people saying theyve seen enough of Chicago winters. Those contemplating or close to retirement often set their sights on warmer and sunnier places to live in their golden years, at least during those months full of snow, cold, wind, and gray. Two of the most popular destinations for Chicagoland weather refugees are Florida and Arizona. But it isnt just the sunshine and golf that attracts so many people to the desert and the beach. Famously, Florida does not have a state income tax, while Arizonas rates tend to be lower than Illinois.

Plenty of these same folks looking to move to Florida and Arizona and take advantage of the lesser state taxation may not want to entirely pull up stakes in Illinois, ideally spending parts of the year here while spending a substantial amount of time in their new sun-drenched home. What many snowbirds fail to understand, however, is that simply declaring yourself a Florida or Arizona resident because you have a home or mailing address in one of those states and spend weeks or months there doesnt mean that you can avail yourself of their favorable tax treatment or avoid paying Illinois income taxes.

If you own or lease a home in Illinois as well as in Florida or Arizona or split your months between being down there and in Illinois, you need to understand what to do and what not to do in order to avoid a significant tax hit.

It Is All About Domicile

Earned Income Tax Credit

The Illinois Earned Income Tax Credit/Earned Income Credit is for working people with low to moderate income to help reduce the amount of tax they owe. The credit is refundable, which means it may result in a refund. You can only claim the Illinois EITC/EIC if you qualify for it on your federal income tax return and itâs worth 18% of your federal EITC/EIC.

You may qualify for the federal EITC/EIC if your adjusted gross income is under $57,414 , you meet basic rules such as having investment income below $10,000 and a valid Social Security number, and you meet the requirements for those without a child or meet all of the qualifying child rules.

Also Check: Do Your Own Taxes Online

Can You Pay Illinois Property Taxes With A Credit Card

In Illinois, you can pay your IL-1040 balance with a credit or debit card through one of three vendors: Official Payments Corporation, Value Payment Systems, or Link2Gov/FIS. American Express, Discover Card, Master Card, and Visa are acceptable payment methods.

The Many Tax Benefits Of Being A Rental Property Owne

When you file your federal tax return, you can deduct property taxes paid on your rental property from the income you report. During the year, you must also report any interest earned on the property.

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Overview Of Illinois Taxes

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Illinois has a flat income tax that features a 4.95% rate. This means that no matter how much money you make, you pay that same rate. Sales and property taxes in Illinois are among the highest in the nation.

Household Income
Number of State Personal ExemptionsDismiss

* These are the taxes owed for the 2021 – 2022 filing season.

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What To Do If You Live In A State With Reciprocity

If you live in a state that has reciprocity with Illinois, there are a few steps you should take to make sure your records are up-to-date for tax time. The forms you need to fill out will depend on your situation, whether you’re living in a state with a reciprocal agreement, and whether you’ve already had Illinois taxes withheld from your paycheck.

Report A Change In Entity A Merger Or A Purchase Of Another Business

Did you acquire your Illinois business or any portion of it by purchase, reorganization or a change in entity, for example, a change from sole proprietor to corporation? If yes, report the changes online at the MyTax Illinois website or complete forms below:

*Please note that failure to file your Employers Contribution and Wage Report will result in the assessment of a penalty. Find current year contribution rate |historical table

Image source: /content/dam/soi/en/web/ides/images/icon_monthly.png

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The Education Expense Credit

You might qualify for a credit of up to $750. This credit is for a portion of the expenses you paid for your dependent child or children to attend kindergarten through 12th grade at a public or nonpublic Illinois school. Your student must be under age 21, and both of you must have been Illinois residents at the time the expenses were paid.

Divorced or separated parents who aren’t filing a joint tax return can’t both claim the credit for the same expenses, but they can split them between their returns. They can each claim the credit for a portion of the expenses incurred.

The credit is limited to single taxpayers with federal AGIs of $250,000, or $500,000 if married and filing jointly. You must file Schedule ICR to claim this credit as well.

Can You Pay Illinois State Taxes In Installments

Illinois Small Business Tax Explained | Learn About Law

Yes, the Illinois Department of Revenue allows those who cannot pay tax debts due to financial hardship to make installment payments. The default length for a tax payment plan in Illinois is 12 months. Its possible to have a plan extended to 24 months in some cases. Terms like the length of your payment plan and monthly totals will vary based on your financial standing.

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Monthly Reporting And Filing Due Dates

Pursuant to Public Act 97-0689, employers with a cumulative total of 25 or more employees in the prior calendar year are required to submit monthly wage reports electronically. Employers will continue to submit quarterly contribution and wage reports, and submit eight additional monthly wage reports.

Do I Have To Pay Income Tax In Illinois

You are required to file an Illinois tax return if you receive income from Illinois and fall into one of the following categories:

  • Resident: Your place of residence was in Illinois for the entire year. It can also be where you live and plan to return after temporary absences, which include: Duty in the U.S. armed forces, residency in a foreign country, out-of-state residence as a student or out-of-state residence during the summer or winter.
  • Part-Year resident: You are considered a part-year resident if you established Illinois residency during the year, or you were an Illinois resident and became a resident of another state during the year.
  • Nonresident: Non-residents that earned enough income from an Illinois source to have a tax liability must file a tax return.

Related:Illinois Income Tax Calculator

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Register For A New Unemployment Insurance Account Number

Newly-created businesses must register with IDES within 30 days of start-up. .

  • Online – Employers can register through the MyTax Illinois website.
  • On Paper – Employers can register by completing one of the two forms below:
  • a. Report to Determine Liability Under the Illinois Unemployment Insurance Act using the UI-1 form

    b. Report to Determine Liability for Domestic Employment – If you or your organization paid a domestic worker or combination of domestic workers cash wages totaling at least $1,000 in a calendar quarter during the current or preceding four years, you or your organization is an employer liable under the Illinois Unemployment Insurance Act. Common types of domestic employees are: live-in companions, housekeepers, butlers, maids, chauffeurs and baby sitters. Babysitting, laundry or other services performed outside the home of the person or organization for which the services are provided do not constitute domestic service. Use the UI-1 DOM form.

    The Illinois Tax Rate

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    The state’s personal income tax rate is 4.95% for the 2021 tax year.

    All residents and non-residents who receive income in the state must pay the state income tax. You must pay tax to Illinois on any income you earn there if you work there and live in any other state except Wisconsin, Iowa, Kentucky, or Michigan. Illinois has reciprocity with these four states, so residents can cross state lines to work there without worrying about paying income tax to their non-resident state.

    A tax credit is available for income taxes paid to another state if you live in Illinois but work in a state other than one of those with reciprocity.

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    Invest In Kids Credit

    Contributions to a qualified Scholarship Granting Organization are eligible for a tax credit equal to 75% of their contribution. The total credit claimed per taxpayer canât exceed $1 million per year. You canât claim this credit if you claimed a portion of the contribution on your federal tax return. Any credit amount that exceeds your tax liability can be carried forward for five years.

    Find Your Property Tax Payment History Online

    The Illinois treasurers website allows you to see your payment history from when you paid your property taxes online. If you want to inquire about your payment, please call the treasurers office at 252-2732. If you paid your property taxes by check, the Illinois treasurers website contains information about your check.

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    Where Do I Pay My Cook County Property Taxes

    Property owners can pay their bill online at cookcountytreasurer.com or in person at the Cook County Courthouse. Chase Bank operates a network of nearly 400 locations in Illinois. You can deposit money into an account at up to 200 community banks.

    Important Information About Property Taxes In Illinois

    Property taxes are essential for government operations and must be levied. In Illinois, the County Board of Assessment establishes due dates for property tax payments, and by law, the first payment is due March 1. The tax due balance is due by June 30, and the second installment is due by that date. If you have any questions about your property tax, you should contact the County Board of Assessment as soon as possible.

    General Tax Return Information

    How to fill out Illinois ST-1 Form (Quarterly/ Monthly Tax)

    Due Date – Individual Returns – April 15, or same as IRS

    Extensions – Illinois allows an automatic extension to October 15 without filing a form. If the taxpayer receives a federal extension of more than six months, the taxpayer is automatically allowed that extension for Illinois. To make an extension payment, use Form IL-505-I, Automatic Extension Payment for Individuals. Form IL-505-I can be accessed by selecting Miscellaneous Forms > IL Extension of Time to File. Form IL-505-I must be mailed with payment to the appropriate address .

    Drivers License/Government Issued Photo Identification: Illinois does not require this information to file the tax return.

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    Try To Pay The Amount Owed

    Whether you owe $100 or $10,000, the first thing you should do is try to find the money. Think about all the places you might be able to get the money that you owe:

    • Borrowing against your home
    • Taking money out of your savings
    • Selling things you own that are valuable
    • Asking family and friends to help you

    Paying now will save you money on interest and penalties.

    How To Calculate Your Illinois Income Tax

    The starting point for your Illinois tax return is your federal adjusted gross income . You’ll find your AGI on line 11 of your Form 1040.

    The IRS introduced a revised federal Form 1040 for the 2018 tax year, and it did so again for the 2019 and 2020 tax years. The 2021 form continues to have AGI on line 11.

    Your AGI represents your income after adjustments are made to it. Adjustments might be for things like student loan interest you have paid or for IRA contributions you made. It’s your gross, or overall, income minus these deductions.

    Your AGI doesn’t account for any itemized or standard deductions or tax credits that you might also be eligible for. These come later. Other deductions are all eventually subtracted from your AGI to arrive at your taxable income, while credits whittle away at your tax bill to the IRS.

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    Who Must Pay Illinois State Income Tax

    Anyone who receives income in Illinois must pay state income tax. The only exceptions relate to Wisconsin, Iowa, Kentucky, and Michigan. Those states have reciprocity agreements with Illinois, which means:

    • Illinois residents who work in these four states must pay income tax to Illinois rather than their work state.
    • Residents of these four states who work in Illinois only need to pay tax in their state of residence, not to Illinois.

    Other Details Taxpayers Should Know

    Illinois Enacts SALT Workaround Legislation

    With an IL tax installment payment plan, interest, penalties, and fees continue to accrue. Therefore, the faster taxpayers pay off their tax liability with the state, the less interest and penalties will accrue. Moreover, the DOR can file a tax lien at any time. Generally, the IL DOR will do so if it feels you may not honor your end of the agreement. If a taxpayer cannot afford the monthly payments with an Installment Payment Plan, they should look to apply for an Offer In Compromise.

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    How To Check The Status Of Your Illinois Income Tax Return

    MasterCard, Discover, American Express, and Visa are the payment methods available for Individual Income Tax in Illinois. The convenience fee is assessed by the credit card service provider on behalf of the customer. Choose the link2gov or fios option from the drop-down menu. If you paid Individual Income Taxes with an e-file, you can see your IRS account information by using the Wheres My Refund tool. To reach an IRS representative, dial 1-800-829-1040. If you use an e-filing website or software, you may also receive emails or updates about your filing status.

    Calculate Federal Payroll Taxes

    First of all, lets calculate federal payroll taxes for your employees. You can use our Illinois payroll calculator to calculate all your employees federal withholdings, plus any additional taxes your business is responsible for paying.

    Heres a summary of all you need to know when youre calculating payroll taxes for your hardworking Illinoisans! For a more detailed explanation of all of the steps below, check out our step-by-step guide.

    • Gross wages, which is simply the amount of money an employee has earned during the last pay period.
    • For hourly employees, multiply the number of hours worked by their pay rate and make sure you dont forget to take overtime into consideration.
    • For salaried employees, divide each employees annual salary by the number of pay periods you have over the course of a year.
  • Calculate any pre-tax withholdings. If your employees have 401 accounts, flexible spending accounts or any other pre-tax withholdings, subtract them from gross wages prior to applying payroll taxes.
  • Deduct federal income taxes, which can range from 0% to 37%. Further withholding information can be found through the IRS.
  • Deduct and match any FICA taxes to cover Medicare and Social Security taxes:
  • For Social Security tax, withhold 6.2% of each employees taxable wages until they have earned $147,000 in a given calendar year. Employers must match this tax.
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    Pay Illinois Income Tax Online

    You can pay your Illinois income tax online through the Illinois Department of Revenues My Tax Illinois website. To do so, you will need to create an account and provide your Social Security number, date of birth, and contact information. Once you have logged in, you will be able to view your tax information and make a payment.

    In Illinois, you are liable for state income taxes based on the income you earn within a tax year in Illinois or while you are a resident. This tax is levied using a self-assessment system similar to that used by the federal government. Individuals in Illinois are subject to a 4.95% state tax rate. The state tax deadline, which is typically on April 15, is frequently followed by the federal tax deadline. If you itemize deductions on your federal return, you can also claim a state income tax deduction. The Tax Cuts and Jobs Act limits state and local tax deductions, including state income taxes, to $10,000 per year.

    Want A Second Home To Avoid Illinois Income Tax

    Verify: Plan to tax people for leaving Illinois?

    Taxes and the cold drive people out of IL to warmer and zero income tax states. Read whats up with IL income tax and how to keep a home in IL and another state.

    If you are over age 50 and especially if youre an empty nester then its probably crossed your mind to get out of dodge. IL has the 2nd highest property taxes in the US. One case where being highly ranked stinks. State income taxes have also gone from 3% to 4.95% in the last few years. Whats coming could be a whole lot worse is the state is in the red in a massive way! Our new Governor Pritzker wants to tax income more than ever before. Unfortunately, when you raise price or tax something more, you generally get smaller less of it as people will obviously try to avoid this extra cost. In this case, one option is to move out of IL. More on this later in this post.

    Why should IL residents expect the worst from tax policy?

    On the November ballot is an IL constitutional law change that if passed would allow for IL to change from a flat income tax to a progressive tax. A progressive tax means the more you earn the higher tax rate you pay. With the fair, flat tax, everybody pays the same rate and the more you earn, the higher your tax bill will be. If progressive tax is passed on November ballot, there will be no way to block future tax rate increases. Both bodies of IL Congress and the Governor are likely to want to attempt to tax their way out of state debt.

    Income up to $10,000 4.75%

    So what do you notice?

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