There are two tax credits available from the Department of Commerce and Economic Opportunity (DCEO) for Illinois withholding tax. You must first apply and qualify with DCEO for either the Illinois Small Business Job Creation Tax Credit or the EDGE credit.
For more information, visit the DCEO website.
A certificate will be issued to you by DCEO when your credit is approved. If DCEO approves you for the Illinois Small Business Job Creation Tax Credit, DCEO will issue you a Tax Credit Certificate. If DCEO approves you for Illinois EDGE credit, DCEO will issue you an EDGE Tax Credit Certificate of Verification.
For each credit certificate approved, DCEO provides the Illinois Department of Revenue (IDOR) with the business’ FEIN and associated amount of credit available.
The federal employer identification number (FEIN) on the credit must match the FEIN on your Illinois Withholding Tax account and IL-941 return.
How does this credit affect my withholding reporting and payments?
Employers: You must continue to withhold tax from your employees’ checks and report the wages and withholding in full on your IL-941 return and employee’s Form W-2. However, instead of paying the Illinois withholding tax to the Illinois Department of Revenue, you will retain the tax withheld up to the amount of the credit certificate you received from DCEO.
IL-501 payments: IDOR will apply your DCEO credit to your first eligible liability period before applying any IL-501 payments. If your DCEO credit is equal to or exceeds the amount of your liability, you should not make IL-501 payments for that period. Any excess amount of DCEO credit will be applied to the next liability period. Making IL-501 payments for liability covered in full by DCEO credit will cause your account to be overpaid for the liability period.
IL-941 Returns: On Line 3, write the remaining amount of DCEO credit you have been awarded.
Illinois Small Business Job Creation Tax credit (ILSBJC) - This credit is applied to the first liability period due after the “tax credit issued” date on the tax credit certificate. For example: If your tax credit certificate states that the tax credit issued date is “February 24, 2015,” the credit is applied to the first quarter of 2015 (IL-941 for period January 1 through March 31, 2015, due April 30, 2015).
Note: The Illinois Small Business Job Creation Tax Credit (ILSBJC) cannot be carried forward or used on or after
July 1, 2021.
Economic Development for a Growing Economy withholding tax credit (EDGE) – The EDGE credit will be applied to the first liability period due after the “taxable year ending month day, year” on the certificate of verification. For example: If your credit certificate of verification states that it is for “taxable year ending December 31, 2014,” the credit is applied to the first quarter of 2015 (IL-941 for period January 1 through March 31, 2015, due April 30, 2015).
DCEO tax credit cannot be refunded.