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Business Income Tax Estimated Payments

Legal References

                                35 ILCS 5/201(p)(9) for pass-through entities electing to pay pass-through entity (PTE) tax

What are business income tax estimated tax payments?

Business income tax estimated tax payments are payments of tax that are generally required to be paid in four equal installments throughout the year.

Corporations filing Form IL-1120, Corporate Income and Replacement Tax Return, who reasonably expect their income tax and replacement tax liability after subtracting Illinois withholding, pass-through withholding payments, and tax credits to be more than $400, must make quarterly estimated payments. 

Partnerships filing Form IL-1065, Partnership Replacement Tax Return,  and subchapter S corporations filing Form IL-1120-ST, Small Business Corporation Replacement Tax Return, who elect to pay PTE tax and who reasonably expect their replacement tax and PTE tax liability after subtracting Illinois withholding, pass-through withholding payments, and tax credits to be more than $500, must make quarterly estimated payments.

If income is not received evenly throughout the year, see Form IL-2220, Computation of Penalties for Businesses, and Form IL-2220 Instructions for further details on annualizing your income.

When are estimated payments due?

Estimated payments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year.

Note: If a due date falls on a weekend or holiday, the payment will be due on the next business day.

How are the amount of estimated payments determined?

Use the Estimated Payment Worksheets in your specific return instructions to determine the correct amount of estimated payments.

For pass-through entities electing to pay PTE tax, the base for computing quarterly estimated payments is the sum of PTE tax and replacement tax.

Reminder: Pass-through entities who do not elect to pay PTE tax are not required to make estimated payments.

What if estimated payments are not made or are insufficient to meet the tax liability?

You may be assessed a late-payment penalty for underpayment of estimated tax if you do not pay the required estimated payments on time. You do not owe the late-payment penalty for underpayment of estimated tax if you made timely estimated payments equaling at least 90 percent of this year's tax liability or 100 percent of the prior year's tax liability (provided you reported a tax liability in the prior year and it was not a short taxable year) by the original due date of the return. We will apply each payment to the earliest due date until that liability is paid unless you provide specific instructions to apply it to another period. You will still be assessed the late-payment penalty for underpayment of estimated tax if you failed to pay the required installment amount by each installment due date.

For more information about penalties and interest, see Publication 103, Penalties and Interest for Illinois Taxes.

What if a pass-through entity electing to pay PTE tax overpays the PTE tax?

If a pass-through entity overpays PTE tax, the pass-through entity may request a refund. The members of the pass-through entity are allowed a credit only for their share of the calculated PTE tax due to the extent that the PTE tax was paid.

How do I make estimated payments?

Estimated payments can be made electronically using MyTax Illinois or ACH Credit or by mail using the payment voucher for the specific return type.

How do I determine how much late payment penalty for underpayment of estimated tax I will owe?

You may complete Form IL-2220, Computation of Penalties for Businesses, to calculate your late payment penalty for underpayment of estimated tax. However, we encourage you to let us figure your penalties and send you a bill instead of completing and filing this form yourself.

Can I apply pass-through withholding, PTE tax credit, gambling withholding, sports wagering winnings withholding, and credit carry forward to my estimated payments?

You may use pass-through withholding paid on your behalf or PTE tax credit on any Schedule(s) K-1-P or K-1-T expected to be received to reduce the estimated tax payment for the quarter in which the tax year shown on the Schedule K-1-P or K-1-T falls and any subsequent tax payment until the entire credit is used.

You may use Illinois withholding from gambling and sports wagering winnings shown on any Form(s) W-2G you receive to reduce the estimated tax payment for the quarter in which the winnings were received and any subsequent tax payment until the entire credit is used.

If you made the election to credit a prior year overpayment to the next tax year and

  • the election was made on or before the extended due date of that prior year return, use the credit to reduce the first estimated tax payment and any subsequent tax payments until the entire credit is used. Note:  If all or a portion of the credit results from payments made after the due date of your first estimated tax installment of that prior year return, that portion of your credit is considered to be paid on the date you made the payment. If that payment date is on or before an estimated payment due date, you may use that portion of the credit to reduce that estimated tax payment and any subsequent tax payments until the entire credit is used.
  • the election was made after the extended due date of that prior year return, the credit will be treated as paid on the date you submitted the election. If that payment date is on or before an estimated payment due date, you may use the credit to reduce that estimated tax payment and any subsequent tax payments until the entire credit is used.