Who is required to withhold Illinois Income Tax and register as an Illinois withholding agent?

Generally, you must withhold Illinois Income Tax if you are required to withhold (or have a voluntary agreement to withhold) federal income tax from payments you make for

  • employee compensation (i.e., wages and salaries, bonus, overtime, and commission pay) paid in Illinois usually reported to a payee on Form W-2;
  • non-wage income such as pensions, annuities, employment income, and sick pay that you have agreed to voluntarily withhold, usually reported to a recipient on Form 1099;
  • gambling or lottery winnings in Illinois paid to an Illinois resident or qualifying non-resident, usually reported to a payee on Form W-2G; or
  • the purchase of the rights to Illinois lottery winnings, reported to the purchaser on Form 1099-MISC.

However, there are some situations that do not require you to withhold Illinois Income Tax. See "When am I not required to withhold Illinois Income Tax?" in Publication 130 for more information. We do not require a separate agreement for payments covered by a federal voluntary withholding agreement. If requested by a payee, you can enter into a voluntary agreement and withhold Illinois Income Tax on Illinois income such as individual retirement accounts (IRAs) or pensions. Note: If you agree to a voluntary withholding agreement then you are required to withhold Illinois income tax.

To register your business, you may choose one of the following options:

If you have additional inquiries, you may submit them to the Questions, Comments, or Request form.