Withholding Tax – IL-941

The Form IL-941 is for small business owners with employees working in the state of Illinois. You’ll need to withhold Illinois income taxes and pay those taxes on your employee’s salaries if you’re the owner of a small business. If you’re required to use this form, you may have some questions about how and when to file this form. Here’s a quick guide to help you learn what you need to do about withholding tax and the Form IL-941.

Who Needs to File Form IL-941?

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Form IL-941 must be filed if you have paid amounts to the state of Illinois subject to having income tax withheld. Examples include:

  • Any wages or form of employee compensation, including overtime, bonuses, and commission. Anything that is usually reported on Form W-2 to the recipient.
  • Income that isn’t from wages. This income includes unemployment, sick pay, pensions, and annuities for which you agreed to withhold Illinois taxes. This information is usually reported on Form 1099.
  • Any winnings from gambling or the lottery. This amount is usually reported on Form W-2G.
  • Lastly, any amounts that are paid to purchase the right to Illinois lottery winnings, Form 1099-MISC.

When Should My Form IL-941 be Filed?

Keep in mind, Form IL-941 has to be filed, even if there were no taxes withheld during the reporting period, such as with seasonal workers, and is due every quarter. Your Form IL-941 must be filed by the last day of the month following the end of the quarter.

  • The first quarter, ending March 31, includes January, February, and March. The first-quarter form is due April 30.
  • April, May, and June are considered the second quarter, and the Form  IL-941 form is due August 2.
  • September 30th marks the end of the third quarter and includes July, August, and September. Third-quarter forms must be filed by November 1.
  • The fourth quarter ends December 31st and includes the months of October, November, and December, and your form will be due January 31st.

How to Get File Form IL-941

You must do several things before you can file the tax withholding tax Form IL-941. Most small businesses need a federal employer identification number or an EIN. You should work on getting your EIN as quickly as possible, hopefully before you hire your first employee. The IRS issues EINs, and you’ll also need one to file your federal taxes. You can apply for your employer identification number online on the IRS website.

You’ll also need to establish your employer identification number to establish an Illinois withholding tax account. You do this with the Illinois Department of Revenue. To complete this step, either register online, in person at a regional office, or by mail. You must also have each employee for your business file Form W-4 and the Illinois Form IL W-4.

Can I Schedule Withholding Payments?

After registering your business with the Illinois Department of Revenue, you will be assigned a schedule to make your withholding tax payments in three different payment schedules: annually, monthly, or semi-weekly. Any new businesses are given a quarterly return schedule and a monthly payment schedule, which may be changed later.

How Do I Know How Much Payments Should Be?

A simple calculation can help you determine how much your payments should be. Your payments should be the same amount you withheld from your payee minus credits you have. Here are some examples:

  • Your payroll for January 1 to January 15 totals $10,000, and you withheld Illinois income tax to a total of $500 from your employees’ pay, and you have no available account credits. Your payment should be $500.
  • Another example is a January 1 to January 15 payroll with a total of $10,000. You had $500 in taxes taken out, and you got a credit of $200 that you may use. Your payment should be $300.

You are not expected to figure out any interest or penalties by yourself. You will receive a bill for this when applicable.

What If I Over or Under Withheld From a Payee?

Correction for an over- or under-withholding from an employee depends on the time of year that the error was made. If you have over- or under-withheld before the end of the calendar year, you may adjust and correct in future payroll cycles. Keep in mind that the amounts you report on your IL-941 have to match the amount you’re withholding from payees. Don’t file amended forms. Your employee will receive a refund or have to pay the difference on their federal tax return.

Pasquesi Sheppard Tax Services

At Pasquesi Sheppard, we offer our clients several types of tax help and other financial tools. You can visit online and take advantage of our tax calculator, hourly paycheck calculator, and payroll deductions calculator. If you need help, you can reach out to our office to schedule a time to come in and speak with one of our professionals.

Our partners invest their time, talent, and energy in direct servicing our clients. These skilled professionals combine their knowledge to help provide you with quick responses for all of your needs. We also offer other services, including bookkeeping services, tax preparation services, and consulting for other aspects of life. Our online information center contains tax forms you may need so that you can download them yourself. You’ll also find IRS publications to help taxpayers get a better understanding of various tax issues.

Reach Out to Pasquesi Sheppard, LLC Today

If you have any questions or would like information on any of our services, reach out to the knowledgeable team at Pasquesi Sheppard, LLC today. Our team of professionals is dedicated to servicing the Chicago and Lake Forest areas with solutions for their accounting and business needs. We’re conveniently located at 585 Bank Lane in Lake Forest, Illinois, and can be reached by phone at 847-234-5000. You can also contact us through the online messaging service, and someone will get back out to you promptly. The team at Pasquesi Sheppard, LLC looks forward to working with you.