Depositing and Reporting Withheld Taxes: Illinois

Depositing and Reporting Withheld Taxes requirements for other states

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

  • Illinois employers are assigned either a semiweekly, monthly or annual payment schedule based on their look-back period; this is the one-year period ending on June 30 of the immediately preceding calendar year. Penalties are imposed for failure to file returns. See Deposit Thresholds and Schedules.
  • Certain employers must make payments of withheld taxes electronically using the semiweekly payment and quarterly return schedule in the following quarter, the remainder of the year and the subsequent year. Employers not required to file electronically are encouraged to do so. See Electronic Deposit Requirements.
  • Employers with 250 or more employees are required to register and electronically transmit Forms W-2, Wage and Tax Statement, and W-2c, Corrected Wage and Tax Statement. Electronic and Magnetic Media Form W-2 Reporting Requirements.

Forms

Employers are required to file Form IL-941, Illinois Withholding Tax Income Return, on a quarterly basis unless instructed otherwise by the Department of Revenue (DOR).

Deposit Thresholds and Schedules

Illinois employers must deposit withheld taxes according to an assigned schedule. Employers are assigned either a semiweekly, monthly or annual payment schedule based on their look-back period; this is the one-year period ending on June 30 of the immediately preceding calendar year. The following are the four payment and return schedules assigned to Illinois employers (see Future Developments):

Semiweekly Payment and Quarterly Return Schedule
Must pay electronically on: File return electronically or use Form IL-941 by:
Wednesday, for amounts withheld on the preceding Wednesday, Thursday, or Friday, and on
Friday for amounts withheld on the preceding Saturday, Sunday, Monday, or Tuesday.
The last day of April, July, October, and January.

Employers that report more than $12,000 in withholding during the look-back period are assigned to the semiweekly payment and quarterly return schedule.

Monthly Payment and Quarterly Return Schedule
Pay electronically or use Form IL-501 by the 15th of each month for amounts withheld in the preceding month. File return electronically or use Form IL-941 by the last day of April, July, October, and January.

Employers that have been registered for less than 18 months, or have a compliance problem, and that reported $12,000 or less in withholding during the look-back period are assigned to the monthly payment and quarterly return schedule.

Monthly Payment and Annual Return Schedule
Pay electronically or use Form IL-501 by the 15th of each month for amounts withheld in the preceding month. File return electronically or use Form IL-941 by January 31 of the following year for amounts withheld the entire year.

Employers that have been registered for the full look-back period, are in good standing and reported more than $1,000, but no more than $12,000, in withholding are assigned to the monthly payment and annual return schedule.

Annual Payment and Annual Return Schedule
File and pay electronically or use Form IL-941 by January 31 of the following year for amounts withheld the entire year.

Employers that, during the look-back period, reported $1,000 or less in withholding and are in good standing with the DOR are assigned to the annual payment and return schedule.

Any time the due date falls on a weekend or a state recognized holiday, the DOR will adjust the due date to the next business day.

Penalties

Employers that fail to file a quarterly return or the annual transmittal form for wage and tax statements required by law will incur a penalty of 2% of the tax shown on the return, up to a maximum of $250. If the return is not filed within 30 days after notice of the failure to file, an additional penalty is imposed of $250, or 2% of the tax, whichever is greater, up to a maximum of $5,000. +35 ILCS 735/3-3

Electronic Deposit Requirements

If an employer's withholding exceeds $12,000 during a quarter, the employer must make the payments electronically using the semiweekly payment and quarterly return schedule in the following quarter, the remainder of the year and the subsequent year. Electronic payments must be made through MyTax Illinois. Illinois encourages any employer not required to make payments electronically to do so.

Annual Reconciliation Forms and Filing Deadlines

Illinois does not require employers to file an annual reconciliation return.

Electronic and Magnetic Media Form W-2 Reporting Requirements

Employers with 250 or more employees are required to electronically transmit Forms W-2, Wage and Tax Statement, and W-2c, Corrected Wage and Tax Statement, to the DOR.

Starting with tax year 2014 filings, employers that are required to file Forms W-2 electronically for federal purposes must file copies of the forms with the DOR using the same electronic media by February 15 of the following year, or by the extended due date of the federal information return. This due date also applies to payroll providers that file payroll returns and complete Forms W-2 for employers of any size.

Employers with fewer than 250 employees are not required to submit Forms W-2 electronically, but they are strongly encouraged to do so. Employers that choose to do so must file the forms with the DOR no later than March 31, but are encouraged to file them by February 15.

Employers may transmit their files either using the Electronic Transmittal Upload page on the DOR website, or by downloading the HttpsPost Utility program from the website and using it to upload the file. The state does not accept pdf files or Excel spreadsheets containing Form W-2 data.

Employers must use the Social Security Administration's EFW2 and EFW2c format.

Electronic filing instructions are included in Publication 110, Form W-2 Electronic Transmittal Requirements. See also Publication 131, Withholding Income Tax Payment and Filing Requirements.

Future Developments

The following changes to the filing and payment requirements take effect January 1, 2017:

  • All employers will be required to file Form IL-941 on a quarterly basis, by the last day of the month following the end of the quarter; annual filing will no longer be available. Filers must include for each quarter all Illinois income tax withheld during the corresponding three months. If the due date falls on a holiday or weekend, the return is due on the next business day.
  • All employers will be assigned to pay withheld income tax on a monthly or semiweekly schedule; annual payments will no longer be permitted. Employers that withhold more than $12,000 in a quarter are required to submit payments electronically on a semiweekly basis. Monthly IL-501 payments are due by the 15th day of the month following the month in which the tax was withheld. Semiweekly IL-501 payments are due by Wednesday for amounts withheld on the preceding Wednesday, Thursday or Friday, and by Friday for amounts withheld on the preceding Saturday, Sunday, Monday or Tuesday.
  • Form IL-941 is updated for tax year 2017. The updates include the addition of a new line to verify compliance with the Illinois Secure Choice Savings Program Act; a section for entering required withholding information for each month of the quarter; and entry lines for the amount of income tax withheld based on payroll dates. The changes will be shown on the form in Step 4, Step 7 and on new Line C.

Illinois Department of Revenue Informational Bulletin, September 26, 2016.