By Payroll and Entitlements Editorial Staff
Illinois released personal income tax withholding guidance for employers due to the COVID-19, or coronavirus, outbreak. The guidance applies to out-of-state employers who employ Illinois residents working from home during the pandemic.
Does Illinois require withholding from out-of-state employers? Illinois will require out-of-state employers to withhold income tax from employees:
- who perform services in Illinois; and
- who perform those services in Illinois for more than 30 days.
Most of those employers must also register for withholding.
The withholding requirements do not apply to out-of-state employers from states that have a reciprocal collection agreement with Illinois.
Will Illinois impose penalties and interest? Illinois will waive penalties and interest for out-of-state employers who fail to withhold if employees are working at home in the state solely due to the pandemic.
Will employees owe income tax? Employees who do not have Illinois income tax withheld may owe income tax. Estimated tax requirements may also apply. (Informational Bulletin FY 2020-29, Illinois Department of Revenue, May 19, 2020.)
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