Pass-through Entity Payments
A new law becomes effective for tax years ending on or after
December 31, 2008. This law requires S corporations, partnerships, and trusts to make Illinois Income
Tax payments on behalf of nonresident shareholders, partners, and beneficiaries. Although this is
referred to as “pass-through entity withholding”, deductions are not actually taken from payments the
pass-through entities make to their owners. Instead, the pass-through entities are required to make
one income tax payment, a “pass-through entity payment”, on behalf of the nonresident owner for each
taxable year.
Nonresident partners, shareholders, and beneficiaries must be notified by the partnership, S corporation,
or trust of the amount of pass-through entity payments made on their behalf. If the pass-through
entity payments are sufficient to satisfy the partner’s, shareholder’s, or beneficiary’s Illinois Income Tax
liability, no return is required. Any taxpayer that files an Illinois tax return for any reason must include
any income passed through from the entity and will be allowed a credit for the pass-through entity payment
made on their behalf.
More information.......
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