Illinois Questions

[Edsel]

I have an S-corp domiciled in Alabama, filing its first Illinois return for 12/31/18.

Illinois apparently has a "replacement tax".  In addition to this, it is not clear whether the shareholders will have to pay personally on S-corp income allocated to Illinois.

Will they?  Is there an Illinois K-1 or equivalent?

[ILLMAS]

There will be an additional tax if the shareholder is an IL resisdent or non-resident of IL.  There is K-1 equivalent only for partnership returns, however ATX does require to in put % of shareholders and the an apportionment factor.

[Edsel]

Thanks.  From your response it appears there will be an additional tax whether the owners are residents or not.  What Illinois form is used to calculate that tax?

[ILLMAS]

The additional  tax is on the individual level, use form IL-1040 if full-time resident, if non resident but earned income in IL, you add form NR to the IL-1040, here is more detailed information on LLCs:

https://www2.illinois.gov/rev/questionsandanswers/pages/604.aspx

[Edsel]

Thank you, Illmas.

[mircpa]

There should be an apportionment tab you indicate there how much sales & wages are allocated to each respective state, accordingly info flows through. For IL 1120ST it is shown under step 6 lines 40 & 41. If taxpayer is non-resident of IL it does calculate 4.95% non resident tax on IL's portion of income that shows on IL K1.

[Edsel]

Thanks to everyone.  I have one seeming problem remaining.

The Illinois 1120ST forces a composite payment on the income from the 1120-S on behalf of the shareholders.  But then on the personal return, the payment is calculated again.  There appears no credit for the amount paid on the 1120-S.

Does this make sense?  Should there be a place to enter a credit?

[TaxmannEA]

The credit is given to the taxpayer on the IL K-1P from the S-Corp return. They then enter it on their IL1040.

[Edsel]

Got It.  Thanks to all.