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Who is required to withhold Illinois Income Tax and register as an Illinois withholding agent?
- employee compensation (i.e., wages and salaries, bonus, overtime, and commission pay) paid in Illinois usually reported to a payee on Form W-2;
- non-wage income such as pensions, annuities, employment income, and sick pay that you have agreed to voluntarily withhold, usually reported to a recipient on Form 1099;
- gambling or lottery winnings in Illinois paid to an Illinois resident or qualifying non-resident, usually reported to a payee on Form W-2G; or
- the purchase of the rights to Illinois lottery winnings, reported to the purchaser on Form 1099-MISC.
- Register electronically using MyTax Illinois.
- Complete and mail Form REG-1, Illinois Business Registration Application.
- Visit a regional office.
Generally, you must withhold Illinois Income Tax if you are required to withhold (or have a voluntary agreement to withhold) federal income tax from payments you make for
However, there are some situations that do not require you to withhold Illinois Income Tax. See "When am I not required to withhold Illinois Income Tax?" in Publication 130 for more information. We do not require a separate agreement for payments covered by a federal voluntary withholding agreement. If requested by a payee, you can enter into a voluntary agreement and withhold Illinois Income Tax on Illinois income such as individual retirement accounts (IRAs) or pensions. Note: If you agree to a voluntary withholding agreement then you are required to withhold Illinois income tax.
To register your business, you may choose one of the following options:
Note: You may register for state tax withholding and unemployment insurance at the same time by registering electronically via MyTax Illinois, visiting a regional office, or completing both Form REG-1, Illinois Business Registration Application, and Form REG-UI-1, Report to Determine Liability Under the Unemployment Insurance Act.
Note: The State of Illinois Business Page explains employers' requirements for unemployment insurance, workers' compensation, nondiscrimination, etc.