If your federal tax return included a taxable refund of Illinois income tax from a prior year, Illinois allows you to subtract that amount when calculating your Illinois income. This prevents the same Illinois tax refund from being taxed again by Illinois. The subtraction is reported on Form IL-1040, Line 6.
What Is the Illinois Income Tax Refund Subtraction?
Illinois allows a subtraction for any Illinois income tax refund or overpayment that was included in your federal adjusted gross income (AGI). This includes amounts that were:
- Refunded to you during the tax year
- Applied to another Illinois tax liability
- Included as taxable income on your federal return
The purpose of this subtraction is to remove the Illinois refund amount from Illinois taxable income.
What Amount Should I Enter?
Enter the amount of your Illinois income tax refund that was included in your federal income.
Do not enter:
- Refunds from other states
- Federal tax refunds
- Illinois refunds that were not included in your federal income
Illinois specifically instructs taxpayers to enter the total amount of any Illinois Income Tax overpayment, including amounts credited to another tax liability, and not to include refunds from other states.
How Do I Find My Illinois Tax Refund?
You may find this amount on:
- Federal Schedule 1, Additional Income and Adjustments to Income
- Your prior-year Illinois return
- Illinois refund records
- Illinois tax notices or account transcripts
If your state tax refund was not taxable on your federal return, you generally should not enter an amount on this screen.
How to Enter an Illinois Tax Refund in the Program
- Open your Illinois return.
- Continue to the Subtractions From Income section.
- Locate the field labeled Illinois State Income Tax Refund included on Federal Form 1040.
- Enter the amount of the Illinois refund that was included in your federal income.
- Continue through the remainder of the Illinois interview.
Frequently Asked Questions
Why does Illinois let me subtract my Illinois tax refund?
Illinois begins with your federal adjusted gross income, which may include a taxable state refund. Illinois allows a subtraction for Illinois income tax refunds so that the refund is not taxed again by Illinois.
Can I enter a refund from another state?
No. Illinois specifically instructs taxpayers not to include refunds received from other states on this line.
What if my Illinois refund was applied to next year's taxes?
Illinois includes any Illinois income tax overpayment, including amounts credited to another tax liability, as part of this subtraction calculation if it was included in federal income.
What if I did not receive an Illinois refund?
If no Illinois income tax refund or overpayment was included in your federal income, leave this field blank or enter zero.
Helpful Tips
- Verify that the refund was included in your federal taxable income before entering it.
- Use only Illinois refund amounts in this field.
- Do not combine Illinois refunds with refunds from other states.
- Keep records showing how the refund amount was determined.
- Review Form IL-1040 after completing your return to confirm the subtraction appears correctly on Line 6.
Additional Information
Illinois reports the state income tax refund subtraction on Form IL-1040, Line 6, Illinois Income Tax Overpayment. This amount reduces Illinois base income and may lower the amount of Illinois tax due.