Key takeaways
- Any S corporation with Illinois net income or loss, or one qualified to do business in Illinois that files federal Form 1120S, files Form IL-1120-ST.
- The 2026 calendar-year return is due March 15, 2027; the seven-month extension to file is automatic, but payment is not extended.
- Choose between the 4.95 percent PTE tax and pass-through withholding for nonresident shareholders before the first estimated payment, not at filing.
- Collect Form IL-1000-E from each nonresident shareholder who claims an exemption from withholding.
Who files Form IL-1120-ST
The Illinois instructions require Form IL-1120-ST from an S corporation that has net income or loss under the Illinois Income Tax Act, or that is qualified to do business in Illinois and must file federal Form 1120S, whether or not it had net income. A Texas S corporation with an Illinois office and a loss still files.
Before the first filing, confirm the entity is registered with the Illinois Department of Revenue, through MyTax Illinois or on Form REG-1.
Dates for tax year 2026 and what the extension covers
Illinois uses the same due date as the federal return: the 15th day of the third month after year end. The instructions give March 15, 2027 for a 2026 calendar-year return. For tax year 2025 the original date was March 16, 2026, because the 15th fell on a Sunday, and the automatic extended date for a 2025 calendar-year return is October 15, 2026.
Illinois grants a seven-month extension to file automatically, with no form. Seven months after March 15, 2027 is October 15, 2027, which is the extended filing date for a 2026 calendar-year company; a fiscal-year company counts seven months from its own original date. If the IRS grants a longer extension, Illinois gives the federal extension plus one month, with a copy attached.
Payment is the trap. Replacement tax, any PTE tax and pass-through withholding are all due by the original date, paid with Form IL-1120-ST-V, MyTax Illinois, credit card or an EFT agreement. The instructions list the penalties separately: a late-filing penalty if no processable return is in by the extended due date, a late-payment penalty if tax is not paid by the original due date, and an underpayment penalty on estimated tax. Interest runs from the day after the original due date.
The tax: replacement tax, PTE tax or withholding
The IDOR rate table lists replacement tax for S corporations at 1.5 percent of net income. Illinois replacement tax deducted on federal Form 1120S, Line 16, must be added back on the Illinois return, so a client who deducts replacement tax every year has an add-back every year. An S corporation that elects PTE tax must add back that tax too if it was deducted federally.
Reconciliation path: start from the federal Form 1120S figures, make the Illinois modifications on Schedule M, apportion if the company has business outside Illinois (Schedule 1299-A carries credits and related adjustments), and apply any Schedule NLD net loss deduction. A $200,000 Illinois net income would carry $3,000 of replacement tax at 1.5 percent; that is a teaching number only.
The second layer depends on a choice. An S corporation can elect PTE tax at 4.95 percent of its calculated net income by checking Step 1, Box L. Otherwise it owes pass-through withholding for any nonresident shareholder who has not given it Form IL-1000-E.
The PTE tax election for 2026
The Illinois instructions say the Illinois Income Tax Act was amended to remove the expiration date for the pass-through entity tax. An S corporation may elect it for tax years ending on or after December 31, 2021, and that includes 2026. Do not tell a client the election sunsets after 2025.
The credit flows to the shareholders on Schedule K-1-P and is listed on Schedule B. The instructions say the credit allocated to shareholders cannot exceed the PTE liability that was reported and actually paid by the S corporation, so a late or short payment shrinks the credit. A nonresident individual whose only Illinois income is the electing entity does not have to file an Illinois return if the credit equals or exceeds the Illinois tax.
An electing company that expects total liability above $500 must make estimated payments with Form IL-1120-ST-V on the 15th day of the 4th, 6th, 9th and 12th months of its tax year. For a calendar-year 2026 company that is April 15, June 15, September 15 and December 15, 2026, so the first three have already passed and the December payment is the one left. A company that does not elect is not required to make estimates. Missed estimates bring an underpayment penalty, and Form IL-2220 is used if the company annualizes income.
Decision rule: the election matters when owners live outside Illinois, because the credit on Schedule K-1-P can offset their Illinois liability and spare some of them a return. Whether it helps depends on how each owner's home state treats the credit and on federal treatment of the tax, so get each owner's adviser involved before the first estimate and note who made the decision.
Nonresident shareholders and pass-through withholding
For a company that does not elect PTE tax, the S corporation pays Illinois tax on behalf of each nonresident shareholder who has not delivered Form IL-1000-E, the certificate of exemption from pass-through withholding. The payment comes from the company, not from the owner's distribution, and the company must tell each owner the amount paid.
Compute it on Schedule K-1-P(3) for each such shareholder and keep the schedule in the file; the instructions say not to submit it unless Illinois asks. The total goes on Schedule B and Form IL-1120-ST Line 59, and the payment goes in with Form IL-1120-ST-V. The instructions describe pass-through withholding and the PTE election as the entity-level mechanisms, so do not offer a client a composite return as an Illinois option.
Withholding reported to your client on a Schedule K-1-P or K-1-T from another entity is claimed on Line 65c, with every page of that schedule attached.
Documents to collect from the client
Request the filed or draft federal Form 1120S with Schedule K-1 for every shareholder, since pages 1 through 5 of Form 1120S must be attached to the Illinois return. Add each owner's state of residence on the last day of the year and every distribution to a nonresident.
Ask for a signed Form IL-1000-E from each nonresident owner who claims an exemption. If the owner will not sign, the firm computes withholding on Schedule K-1-P(3) instead. Ask for any Schedule K-1-P or K-1-T the company received from another partnership or trust, because those carry both income and withholding credits.
Collect Illinois sales by customer location for apportionment, Illinois replacement tax deducted on the federal return, the depreciation schedule for Form IL-4562 if the company took bonus depreciation, any Illinois net loss carryforward for Schedule NLD, and each estimated payment confirmation if PTE tax was elected.
Filing, signing and correcting
A corporate officer signs Form IL-1120-ST. A paid preparer also signs and enters a PTIN, the firm's name, FEIN, address and phone number. Schedule B goes with every return; the Schedule K-1-P copies issued to shareholders do not.
To correct a filed return, file Form IL-1120-ST-X, not a second Form IL-1120-ST. A change from the IRS must be reported on Form IL-1120-ST-X within 120 days after it is agreed or finally determined, which is the date to put in a client's calendar when a federal amended return is filed for the company.
For tax years ending on or after December 31, 2025, Illinois changed its apportionment method for unitary businesses, and Schedule B Section B Lines J, K and L cannot be negative. Those changes begin with the 2025 return and carry into 2026. The forms and instructions for tax year 2026 were not published when this was written, so recheck line numbers and the Box L election wording when they appear.