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May 26, 2020
2020-1381

Illinois provides income tax withholding guidance for employees working temporarily in the state due to COVID-19

The Illinois Department of Revenue issued FY 2020-29 explaining the Illinois income tax withholding requirements that apply when employees who normally works in another state, temporarily work from home within Illinois due to the COVID-19 emergency. The guidance states that employee wages are subject to Illinois income tax and withholding if the nonresident employee performed their normal duties within the state for more than 30 working days. If an Illinois resident employee has performed work for more than 30 working days from their home in Illinois for an out-of-state employer, the employer may be required to register with the Illinois Department of Revenue (IDOR) and to withhold Illinois income tax from the wages of those employees.

The Department will waive penalties and interest for out-of-state employers who fail to withhold Illinois income taxes for Illinois employees if the sole reason for the Illinois withholding obligation is temporary work within the state due to the COVID-19 emergency.

The Department also notes that if employees do not have Illinois income tax withheld by their employers, they could owe Illinois income tax and be subject to estimated tax payment requirements. Estimated tax payments are required if employees reasonably expect their tax liability to exceed $1,000 after subtracting their Illinois withholding, pass-through withholding, and various tax credits. For more information on estimated tax payments for individuals, see Form IL-1040-ES, Estimated Income Tax Payments for Individuals.

The Department reminds employers that confirm the proper amount of Illinois income tax withholding, employees just complete and return to their employers, Form IL-W-4, Employee's and other Payee's Illinois Withholding Allowance Certificate and Instructions.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Peter Berard (peter.berard@ey.com)

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