Illinois employer tax information
About Illinois employer tax information
With Square, you can run payroll, pay your taxes and stay ahead of the compliance to focus on running your business. This guide is intended for your state taxes only. It’s important to note that laws vary by jurisdiction, and this guide does not attempt to address all jurisdictions or federal taxes — for example, counties or cities often have requirements that differ from federal and state law.
Before you begin
To sign up for Square Payroll in Illinois, you must be registered as an employer with the Illinois Department of Revenue (IDOR) and Department of Employment Security (IDES), and provide us with your Illinois Unemployment Account Number and Unemployment Insurance (UI) Contribution Rate.
The Illinois Department of Employment Security typically requires employers to file and pay unemployment taxes starting in the quarter that wages are first paid. If you become liable for unemployment taxes and register an account in a later quarter, it may be necessary to file these taxes retroactively. Visit the Illinois website or contact the IL Department of Employment Security directly to determine your requirements and ensure any outstanding tax filings are completed promptly to avoid penalties.
Illinois payroll tax details
Square Payroll processes the following per the frequency for the listed state agencies
Department of Economic Security (IDES)
Monthly Wage Report: processed monthly
Unemployment Insurance Payment: processed quarterly
Employer's Contribution and Wage Report (UI-3/40): processed quarterly
New Hire Report: processed per new employee
Department of Revenue Payment Coupon (IL-501): processed per pay run
Withholding Income Tax Return (IL-941): processed quarterly
Wage and Tax Statement (IL W-2): processed annually
Make Illinois payroll tax payments
To make Illinois income tax payments, you must be registered with the Illinois Department of Revenue and have an Illinois Taxpayer Identification Number (also known as the Illinois Department of Revenue (IDOR) Account ID Number, which was formerly called the Illinois Business Tax Number (IBT)). If you do not have an account number you can register for one on the IDOR website.
There are two options for making income tax payments.
- To pay online, you can pay through MyTax Illinois or by electronic payment. You will need to complete a Form EFT-1 (Authorization Agreement for Certain Electronic Payments) before you can pay by ACH Credit. Once your form is received, you will be contacted by the department with further instructions. For more information on electronic payment options, visit the Illinois Department of Revenue website, call 217-782-6257, or email the ILDOR at rev.taxpay@illinois.gov.
- To pay by mail, complete Form IL-501 and write a check payable to the Illinois Department of Revenue. Include your Illinois Taxpayer Identification Number, Federal Employer Identification Number (EIN) and “IL-501” at the top of your check. Mail your check to:
Illinois Department of Revenue
PO Box 19447
Springfield, Illinois 62794-9447
To make Illinois state unemployment tax payments, you must be registered with the Illinois Department of Economic Security (IDES). If you do not have an Unemployment Account Number (also known as the Unemployment Insurance Account Number), you can register for one on the IDES website.
You can make an online payment through the Illinois TaxNet by electronic fund transfer or by using your credit or debit card. You will need a payment coupon number to make a payment using your credit or debit card, which can be found at the bottom of each UI-3/40 form or collections document the Department mails.
For more information on state income taxes, contact the IL DOR at 800-732-8866 or visit the Illinois Department of Revenue website. For more information on state unemployment taxes, contact the IL DES at 800-244-5631 or visit the Illinois Department of Economic Security website.
Make Illinois payroll withholding tax filings
Quarterly withholding tax returns are due by the last day of the month following the end of the calendar quarter (for example, due on April 30 for the first quarter). You must file Form IL-941 electronically. If you are unable to do so, you can complete Form IL-900-EW to request a waiver:
- To file online, use the MyTax Illinois website to file, and make payments online.
- To file by mail, download Form IL-941. If you are making a payment, use Form IL-501 Payment Coupon.
For more information on state income taxes, contact the Illinois Department of Revenue at 800-732-8866 or visit the MyTax Illinois website.
W-2s are due by January 31 for the preceding calendar year. If you are an employer who is required by the federal government to electronically file Form W-2, Wage and Tax Statements, during the year, you must electronically transmit these informational returns for your Illinois employees and withholding. All other employers may electronically transmit these informational returns; however, you are not required to do so:
To file online, use the MyTax Illinois website.
For more information on state income taxes, contact the Illinois Department of Revenue at 800-732-8866 or visit the MyTax Illinois website.
Illinois W-2s are due by February 15 for the preceding calendar year. If you are an employer who is required by the federal government to electronically file Form W-2, Wage and Tax Statements, during the year, you must electronically transmit these informational returns for your Illinois employees and withholding. All other employers may electronically transmit these informational returns; however, you are not required to do so:
To file online, use the MyTax Illinois website.
For more information on state income taxes, contact the Illinois Department of Revenue at 800-732-8866 or visit the Illinois Department of Revenue website.
Make unemployment insurance tax filings in Illinois
Unemployment insurance tax reports and payments are due by the last day of the month following the end of the calendar quarter (for example, on April 30 for the first quarter):
- To file online, go to MyTax Illinois and pay any taxes due using Electronic Funds Transfer (EFT) or by check.
- To file by mail, download Form UI-3/40 and include the completed form with a check for any payments due.
You must file quarterly returns even if no contributions are due. You will be subject to a penalty if you fail to file.
For more information on state unemployment taxes, contact the Illinois Department of Employment Security at 800-244-5631 or visit the Illinois Department of Economic Security website.
Amend duplicate tax filings in Illinois
The Illinois Department of Revenue (DOR) allows you to correct any misreported payroll on your Form IL-941 by submitting Form IL-941-X. Log into your MyTax Illinois account to file electronically or download Form IL-941-X to file by mail. Here are some general guidelines for completing your adjusted return:
- Obtain a copy of the Form IL-941 that was originally filed. This is necessary to fill out the “Previously reported” section of your amended return.
- Submit your completed return online or by mailing to the address listed on the form.
- File your Form IL-941-X with the DOR as soon as possible to avoid unnecessary penalties or fees from underreporting your wages and taxes. If you have any questions, contact the Illinois Department of Revenue at 800-732-8866.
The Illinois Department of Revenue (IDOR) allows you to correct any payroll that was misreported on a previously submitted Form IL W-2 by filing an amended Form IL W-2c return.
- Log into your MyTax Illinois account.
- Download Form IL W-2c.
- Use the information from Square’s Form IL W-2 tax summary to fill out your amended return.
- Submit your amended form online.
File your amended Form IL W-2c with the IDOR as soon as possible to avoid unnecessary penalties or fees from underreporting your wages and taxes. If you have any questions, contact the Illinois Department of Revenue at 800-732-8866.
The Illinois Department of Employment Security (IDES) allows you to correct any payroll that was misreported on a previously submitted Form UI-3/40 by re-filing an amended return.
- Log into your MyTax Illinois account.
- Use the information from Square’s Form UI-3/40 tax summary to fill out your amended return.
- Submit your amended return online.
File your Form UI-3/40 with the Illinois Department of Employment Security as soon as possible to avoid unnecessary penalties or fees from underreporting your wages and taxes. If you have any questions, contact the IDES at 800-247-4984.
Find your Illinois tax account numbers and tax rates
You must be a registered employer to have an Illinois Unemployment Account Number and Illinois Taxpayer ID Number. Registration is required in order to acquire both of these numbers and we must have these numbers in order to make Illinois state tax payments and filings on your behalf.
To get your Illinois Payroll Account Numbers, register online with MyTax Illinois. After you complete registration, you will receive your Illinois Unemployment Account Number and Taxpayer ID Number.
Square Payroll only requires the first seven digits (XXXXXXX) of your Unemployment Account Number. Your Taxpayer ID Number (also known as an Illinois Department of Revenue [IDOR] Account ID Number or Illinois Business Tax number [IBT number]) typically matches your nine digit (XX-XXXXXXX) Federal Employment Identification Number (EIN) followed by a three-digit (XXX) Sequence Number.
To locate your Unemployment Account Number:
- Sign in to your Mytax Illinois Account.
- Locate your Unemployment Account Number on any previously filed Employer’s Contribution & Wage Report (Form UI-3/40).
- Locate your Unemployment Account Number on the Notice of Contribution Rate sent by IDES in December each year.
To locate your Taxpayer ID Number:
- Sign in to your MyTax Illinois online account.
- Locate your Taxpayer ID Number on any previous Illinois Withholding Income Tax Return (Form IL-941).
You must provide your UI Contribution Rate when signing up for Square Payroll so we can accurately compute this tax. To locate your UI Contribution Rate:
- If you are a new employer, you will receive your Unemployment Contribution Rate after you complete registration on MyTax Illinois. The UI Contribution Rate includes the Fund Building Rate.
- If you are an existing employer switching to Square Payroll, you can look your rate up online by signing in to your MyTax Illinois Account or locate it on the Notice of Contribution Rate that IDES mails each December. The UI Contribution Rate includes the Fund Building Rate.
If you can’t find your UI Contribution Rate, call IDES at 800-247-4984.
You are responsible for ensuring Square Payroll has the correct UI Contribution Rate for your business. If you need to update your rate, you can do so from your Tax forms in your Square Dashboard.
Payroll reciprocal state agreements
A reciprocal agreement is an agreement between two states that allows employees that work in one state but live in another to request exemption from tax withholding in their employment state. This means that the employee would not have income tax withheld from their paycheck for their employment state; they would only pay income taxes to the state where they live.
A Non-Residency Certificate (or statement or declaration), is used to declare that an employee is a resident of a state which has a reciprocal agreement with their work state and therefore chooses to be exempt from withholding income tax in their work state. A non-resident employee qualifying for this exemption must complete and file this declaration with his or her employer as authorization for the employer to stop withholding state income taxes where the employee works. Employers should keep the non-residency certificate on file.
Illinois has reciprocal agreements with:
Iowa
Kentucky
Michigan
Wisconsin
Non-resident employees should file Form IL-W-5-NR.