Step-by-Step Guide on How to File Your Illinois Tax Return for 2021

Filing an Illinois state tax return for 2021 remains a legal obligation for many individuals and small business owners who lived or earned income in the state during that tax year. Although the official income tax filing deadline was April 18, 2022, the Illinois Department of Revenue still accepts past-year returns. This guide provides detailed, step-by-step instructions on filing your Illinois tax return for 2021, including eligibility, forms, calculations, and payment options.

Many taxpayers don't know they can still file after the deadline. You may have to pay extra fees and interest if you file your return late. However, filing your return as soon as possible can help you avoid these fees and follow state law. This guide talks about essential things from the 2021 tax year, like the uniform tax rate, the available exemptions, how to track your refund, and changes to the rules for filing under the Illinois Income Tax Act.

This resource is designed for individuals, sole proprietors, and small business entities navigating the filing of a 2021 Illinois return. Whether you are a full-year resident, part-year resident, or nonresident with Illinois-sourced income, this article will guide you through each requirement. The following sections cover eligibility, relevant forms and schedules, filing options through MyTax Illinois, and how to manage any outstanding liabilities from the current tax year.

Who Needs to File an Illinois Tax Return for 2021?

Filing requirements for the 2021 tax year depend on residency status, income level, and federal filing obligations. The Illinois Department of Revenue outlines specific criteria under the Illinois Income Tax Act to determine whether a taxpayer must file Form IL-1040, the standard individual income tax return.

1. Full-Year Illinois Residents

You must file a 2021 Illinois tax return if any of the following apply:

You must file a federal income tax return for 2021, regardless of your Illinois income level.
Your Illinois base income exceeded your Illinois exemption allowance, even if you were not required to file federally.

2. Part-Year Illinois Residents

If you lived in Illinois for only part of 2021, you must file if:

You earned income from any source while residing in Illinois.
You had Illinois-source income after moving out of state but before the year ended.

3. Nonresidents with Illinois-Sourced Income

Nonresidents must file Form IL-1040 and Schedule NR if:

You received taxable income from Illinois sources, such as wages, rental, or business earnings.
Your income created a tax liability under Illinois law.

4. Reciprocity for Border State Workers

Illinois residents who worked in Iowa, Kentucky, Michigan, or Wisconsin may still need to file if:

They earned income in those states and wish to claim a credit for taxes paid using Schedule CR.
They want to ensure compliance with state-to-state reporting obligations.

5. Small Business Owners and Sole Proprietors

Individuals who operated a sole proprietorship or single-member limited liability company (LLC) in 2021 must file if:

They had business income sourced to Illinois.
Their combined income exceeded the exemption threshold.

Illinois residents must also file a report for private-party vehicle purchases, use tax liabilities, or any other obligations under the Use Tax Act, Retailers’ Occupation Tax Act, or Transportation Network Providers Act, if applicable.

Key 2021 Illinois Tax Filing Information

Accurate filing for the 2021 tax year begins with understanding the key components of Illinois’s income tax structure. Under the Illinois Income Tax Act, individuals are taxed flatly, and federal income thresholds limit exemptions. For those filing now, it’s essential to account for any applicable updates, credits, and obligations unique to that year.

Tax Rates, Exemptions, and Filing Status

For the 2021 tax year, the individual income tax rate remained a flat 4.95%, applied uniformly across all income levels. Most taxpayers could claim a basic exemption of $2,375, though the exemption claimed was disallowed if the taxpayer's federal adjusted gross income (AGI) exceeded:

$500,000 for those married filing jointly
$250,000 for all other filing statuses

Your Illinois filing status generally mirrors your federal status. However, taxpayers must verify whether their base income excludes any adjustments to motor vehicles purchased for business or personal use under the Illinois Vehicle Code.

In addition, taxpayers must be aware of the electronic filing exception rules. While most individuals are encouraged to e-file using a MyTax Illinois account, paper filing remains an option for those with exceptional circumstances or system accessibility issues.

What’s New for 2021

Several changes and enforcement efforts were introduced for the 2021 filing year:

Line 28 on Form IL-1040 was added to allow credit for taxes paid by partnerships or S corporations under the Service Occupation Tax Act and related statutes.
Refunds were no longer issued via debit card; direct deposit through your MyTax Illinois account was strongly encouraged.
The Illinois Department of Revenue intensified identity protection, issuing more identity verification letters and strengthening protocols to prevent fraud.

Taxpayers should also be aware of enforcement and reporting requirements related to tobacco products sold within the state. These rules reference the official definition of tobacco products and apply particularly to retailers operating under the Hotel Operators Occupation Tax or Retailers’ Occupation Tax Act. Products are taxed based on the wholesale price, and unregistered sellers may face an audit under provisions enforced by the Informal Conference Board.

Special attention is also required for those reporting current tax year liabilities involving private parties, such as purchases of vehicles that may not be eligible under the rolling stock exemption or that exclude vehicles subject to retail sales tax.

Failure to pay on time may result in an estimated payment penalty, particularly for filers with quarterly obligations or who did not prepay sufficient tax during the year. All revenue committed by the Illinois Department of Revenue supports general fund allocations and enforcement of compliance efforts.

What Forms and Schedules Do You Need?

Filing your 2021 Illinois return requires a clear understanding of which forms apply to your situation. The Illinois Department of Revenue provides a standard set of documents for individual taxpayers, with Form IL-1040 as the filing process. You may also need to complete additional schedules depending on your income type, residency status, or credits.

Primary Form – IL-1040: Illinois Individual Income Tax Return

Form IL-1040 is the primary document to report individual income tax to the state. It applies to full-year residents, part-year residents, and nonresidents who earned Illinois-source income. This form requires basic personal information, federal adjusted gross income (AGI), and applicable additions or subtractions to arrive at your Illinois base income. You will also calculate exemptions, total tax, and any refund or payment due.

All taxpayers must submit this form unless they qualify for a specific filing exclusion. You can complete Form IL-1040 electronically through your MyTax Illinois account or print and mail it to the address provided by the Illinois Department of Revenue.

Common Supporting Schedules for Illinois Income Tax Filers

Several schedules may be required based on your tax situation:

Schedule M – Other Additions and Subtractions: Use this schedule if you have income or deductions that need to be added to or subtracted from your federal AGI when calculating Illinois income.
Schedule ICR—Illinois Credits: Complete this if you plan to claim credits such as the property tax credit or K–12 education expense credit.
Schedule CR—Credit for Tax Paid to Other States: Use this schedule if you are an Illinois resident who paid income tax to another state and want to avoid double taxation.
Schedule IL-E/EIC – Exemptions and Earned Income Credit: This form is required if you claim dependents or are eligible for the Illinois Earned Income Credit.
Schedule NR—Nonresident and Part-Year Resident Computation: File this schedule if you were not a full-year Illinois resident and had income during your period of Illinois residency.
Form IL-505-I – Automatic Extension Payment: If you are filing for an extension and owe tax, use this form to make a timely payment.

Each schedule is available at tax.illinois.gov and includes detailed instructions. Including the correct schedules with your return ensures accurate processing and avoids unnecessary delays.

Step-by-Step Instructions to Complete Form IL-1040

Form IL-1040 is the official document for calculating and reporting your 2021 Illinois individual income tax. Below is a step-by-step guide for accurately completing each significant section of the form and complying with the Illinois Department of Revenue instructions.

Step 1 – Entering Personal Information

Begin by completing the personal information section at the top of the form:

Enter your full legal name, date of birth, and Social Security number.
Provide your current mailing address.
Indicate your filing status. This typically matches your federal return.
Select the appropriate boxes if you are a nonresident or part-year resident.
If another individual can claim you as a dependent, please indicate this by marking the appropriate field.

Be sure all information is accurate and consistent with your federal return to avoid delays.

Step 2 – Reporting Income

In this section, you will report your total income as defined by Illinois law:

Line 1: Enter your federal adjusted gross income (AGI) from Form 1040.
Line 2: Include federally tax-exempt interest and dividend income.
Line 3: Complete Schedule M and transfer the amount if you have other income additions.

These lines determine your Illinois total income before applying subtractions or exemptions.

Step 3 – Calculating Base Income and Subtractions

This portion allows you to subtract qualifying income from your total income:

Line 5: Enter the amount of qualifying Social Security and retirement income, if applicable.
Line 6: Include any Illinois income tax refund in your federal return.
Line 7: Use Schedule M to report additional allowable subtractions.
Line 9: Subtract total deductions from your total income to arrive at your Illinois base income.

Ensure that all supporting documentation is included if you claim any subtraction.

Step 4 – Claiming Exemptions

Exemptions help reduce your taxable income:

Line 10a: Enter the basic exemption amount. For 2021, this is $2,375 per eligible filer.
Line 10b: Add $1,000 if you or your spouse were age 65 or older.
Line 10c: Add $1,000 if you or your spouse were legally blind.
Line 10d: Use Schedule IL-E/EIC to claim dependent exemptions.

Exemptions may not be allowed if your federal AGI exceeds the state limit.

Step 5 – Calculating Your Tax and Final Amount Owed or Refund

This section finalizes your return:

Line 11: Subtract total exemptions from your base income to calculate net income.
Line 12: Multiply net income by 4.95% to determine your Illinois income tax due.
Line 13: Add any recapture of investment tax credits, if applicable.

After determining your total tax liability, apply any tax credits and withholding to calculate whether you are due a refund or must make an additional payment. You can request a direct deposit refund or make payments through your MyTax Illinois account.

Carefully review your completed form and attachments before signing. Double-check all math and confirm that all necessary schedules and documentation are included.

Common Mistakes to Avoid

Filing errors can lead to processing delays, refund issues, or penalties. Before submitting your 2021 Illinois individual income tax return, carefully review these common mistakes:

Incorrect Social Security Numbers: Ensure all SSNs match those on your federal return and are entered without errors.
Math Errors: Double-check calculations on exemptions, base income, and the 4.95% tax rate. Miscalculations are among the most frequent filing issues.
Missing Schedules or Attachments: If you reference any supporting schedule (e.g., Schedule M, ICR, or CR), it must be included with your Form IL-1040.
Wrong Filing Status: Use the same filing status as your federal return unless Illinois law permits a change (e.g., part-year residents filing separately).
Unsigned Return: Both spouses must sign if filing jointly. Unsigned paper returns will not be processed.
Missing Withholding Documents: Include W-2s, 1099s, and Schedule IL-WIT to verify tax withheld.
Incorrect Refund or Payment Info: Verify your MyTax Illinois account information or paper check details to avoid misdirected payments.

A final review helps avoid unnecessary delays and potential correspondence from the Illinois Department of Revenue. Refer to the Illinois Department of Revenue’s Form IL-1040 Instructions for additional guidance.

How to File Your Illinois Tax Return

The Illinois Department of Revenue offers two primary methods to file your 2021 individual income tax return: electronic filing and paper filing. Both options are accepted, but electronic filing is preferred for faster processing, greater accuracy, and immediate confirmation.

E-Filing Through MyTax Illinois

MyTax Illinois is the official electronic filing platform that the Illinois Department of Revenue offers. It is the quickest and safest way to file your 2021 Illinois individual income tax return. This service is free for all individual taxpayers, regardless of income, and supports the entire filing process.

There are several benefits to filing electronically through MyTax Illinois. It speeds up the process of getting your refund, especially if you choose direct deposit, and it lowers the chance of mistakes by using built-in math checks and real-time validation. The platform lets you send sensitive financial information safely, get immediate confirmation of a successful submission, and see your payment history, estimated tax payments, and payment tracking.

To get started, visit the MyTax Illinois website and create a new account or log in to your existing one. Once signed in, select the “Individual” option and follow the system’s guided instructions to complete Form IL-1040. You can also upload any required supporting schedules or documents as part of the submission process.

Mailing a Paper Return

Paper filing is available for those who meet the electronic filing exception criteria or prefer to file by mail. Use black or blue ink only and avoid stapling documents. Mail your completed Form IL-1040 and all attachments to:

If no payment is included:
Illinois Department of Revenue
PO Box 19041
Springfield, IL 62794-9041

If a payment is included:
Illinois Department of Revenue
PO Box 19027
Springfield, IL 62794-9027

Allow 6–8 weeks for processing. Make copies of all documents for your records and consider using certified mail to confirm delivery.

How to Make a Payment or Set Up a Plan

If you owe individual income tax for the 2021 filing year, the Illinois Department of Revenue provides several payment options. The most convenient way to pay is electronically through your MyTax Illinois account, where you can make a one-time payment or set up a payment plan.

Electronic Payment Options

Through MyTax Illinois, you may authorize a direct bank transfer (ACH) from your checking or savings account. This option is free and allows you to schedule payments in advance. Though third-party processors apply service fees, you may also pay by credit or debit card. Payment information is transmitted securely, and you will receive confirmation upon completion.

Check or Money Order

If you prefer to pay by mail, make your check or money order payable to “Illinois Department of Revenue.” Include your Social Security number, the tax year (2021), and your phone number on the memo line. Do not send cash. Mailed payments must be directed to the appropriate address in the instructions on Form IL-1040.

Penalties, Compliance, and Support

Late payments may result in interest charges and an estimated payment penalty, especially if taxes were not prepaid throughout the year. If you received an identity verification letter, your refund or account may be placed on hold until your identity is confirmed. Additionally, certain taxpayers, such as retailers registered to sell goods defined under the state’s official definition of tobacco products, must comply with payment and reporting requirements specific to their business category.

You may request an installment plan through MyTax Illinois if you cannot pay your full balance. Approval depends on the amount owed and your filing history.

How to Track Your Refund or Check a Balance

After filing your 2021 Illinois individual income tax return, you can monitor your refund status or check any outstanding balance using tools provided by the Illinois Department of Revenue.

Tracking Refund Status

To check the status of your refund, use the official Where’s My Refund? Tool on the Illinois Department of Revenue website. You will need your Social Security number, the exact refund amount on your return, and your filing status.

Most electronic returns are processed within two to three weeks. If you requested a paper check, allow additional time for delivery. Paper-filed returns may take six to eight weeks to process, plus extra time for mailing. Refund status updates are available daily.

Checking Your Balance in MyTax Illinois

To view your account balance, log in to your MyTax Illinois account. From your dashboard, you can:

View current tax year liabilities
Review payment history
Make one-time or recurring payments.
Request a payment plan if needed.

If your account is flagged for identity protection, you may receive an identity verification letter requesting additional documentation before refund release or balance updates can be completed. Respond promptly to avoid delays.

Regular account monitoring helps ensure accurate payment tracking and prevents compliance issues related to outstanding tax obligations.

Final Filing Checklist

Before submitting your 2021 Illinois individual income tax return, it is essential to verify that all forms, attachments, and personal information are complete and accurate. Make sure you follow the checklist below to avoid any mistakes:

Return Preparation

Form IL-1040 is completed in full with accurate math and reviewed line-by-line.
Filing status matches your federal return (unless you qualify for a permitted exception).
All applicable lines on the form are filled out clearly in black or blue ink.

Required Documents

All W-2s, 1099s, and income statements are attached.
A copy of your federal Form 1040 and any related schedules is included.
All required Illinois schedules (e.g., M, CR, ICR, NR, IL-E/EIC) are attached.
Retailers registered with the state have filed the correct forms based on their business classification.

Payment and Refund

The payment method is selected (if tax is owed), and the information is accurate.
Bank details for direct deposit are correctly entered (if expecting a refund).

Final Steps

If filing jointly, both spouses must have signed the return.
Copies of all documents have been made for your records.
The return is submitted electronically via MyTax Illinois or mailed to the correct address.

Completing these steps reduces the risk of delays, errors, or rejected filings by the Illinois Department of Revenue.

Frequently Asked Questions (FAQs)

What if I missed the filing deadline for April 18, 2022?

You can still file your 2021 Illinois tax return. While penalties and interest may apply if you owe tax, submitting late is better than not filing. If you file for a refund within three years of the due date, there is no penalty.

Can I still e-file my 2021 Illinois tax return for free?

The Illinois Department of Revenue allows free e-filing of prior-year returns through MyTax Illinois. This platform is available to all individual taxpayers and offers secure filing, error checks, and direct deposit options. Supporting documents must be uploaded with your Form IL-1040 submission.

How do I pay if I can't afford the full amount right now?

You should still file your return on time to avoid the failure-to-file penalty. Then, log in to your MyTax Illinois account to request an installment plan. Interest and penalties will continue to accrue, but timely filing helps minimize total costs and keeps you compliant.

What tax credits can I claim on my 2021 return?

You may be eligible for the property tax credit, the K–12 education expense credit, and the Illinois Earned Income Credit. Depending on your eligibility, these are claimed using Schedule ICR and Schedule IL-E/EIC. Refer to the instructions on each form for full qualification rules.

How do I amend a 2021 Illinois return?

To correct a previously filed return, you must submit Form IL-1040-X. Do not file a second original return. If there have been changes to your federal return, ensure your amended state return reflects those updates. Attach supporting documents and file them as soon as possible.

Can I file jointly if one spouse lives in another state?

Married taxpayers can file jointly even if one spouse was a part-year or nonresident. However, you must include all income earned by both spouses and may need to complete Schedule NR or Schedule CR to avoid double taxation on out-of-state income.

How long do I have to claim a refund from 2021?

You have three years from the original due date, April 18, 2022, to claim your 2021 Illinois tax refund. This means you must file no later than April 18, 2025. Thereafter, any refund you’re owed is forfeited under Illinois law.