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Illinois Withholding: What you need to know

All Illinois employers obligated to withhold federal income tax are required to deduct state income tax from wages of both resident and nonresident employees during each payroll period. Withholding may be based on wage bracket withholding tables or the percentage method provided by the Department of Revenue.
“Employer” defined. An employer is:
• A person or organization that has an office or transacts business in Illinois for whom a worker performs a service as an employee and is liable to withhold and pay federal income taxes to the Internal Revenue Service (IRS);
• A person or organization that has an office or transacts business in Illinois and that has control of the payment of wages for employee services, if the employer does not have control of the payment of wages; or
• A payer that has an office or transacts business in Illinois and that makes payments from which federal income taxes are withheld.
“Employee” defined. An employee is either:
• A person who performs services subject to the legal control and direction of an employer,or
• An Illinois resident who receives payments on which federal income tax is withheld by the employer.
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Reciprocal state agreements. Illinois has reciprocal agreements with Iowa, Kentucky, Michigan, and Wisconsin. No Illinois withholding is required on compensation paid by Illinois employers to residents of these states if the employee files Form IL-W5, Declaration of Residency, with the employer.
For the most part, Illinois follows the requirements of federal law, automatically updating state requirements to conform to amendments made to the federal Internal Revenue Code. Compensation that is subject to withholding under federal law is ...

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Illinois Withholding Resources

Withholding Products

Taxation and Withholding Explained Webinar Recording
BLR Webinar: "Taxation and Withholding Explained: Compliance Tips for Multistate Employers""
Employment Taxes in Multiple States Webinar Recording
BLR Webinar: "Employment Taxes in Multiple States: Step-by-Step Calculation and Reporting Strategies""
Payroll Webinar Recording
BLR Webinar: "Payroll: How to Legally Handle Tax Levies and Garnishments""
IRS and ICE Audit Alert Webinar Recording
BLR Webinar: "IRS and ICE Audit Alert: How to Avoid and Manage Payroll and Recordkeeping Scrutiny""
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Claim Your Free Copy of Top 100 FLSA Overtime Q&As

We’ve compiled a list of the 100 most commonly asked questions we have received on the federal Fair Labor Standards Act (FLSA) overtime regulations.
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This report, "Top 100 FLSA Q&As", is designed to provide you with an examination of the federal FLSA overtime regulations in Q&A format, including valuable tips for bringing your workplace into compliance in an affordable manner.

At the end of the report, you will find a list of state resources on wage and hour issues. This report includes practical advice on topics such as:
  • FLSA Coverage: How FLSA regulations apply to all employers and any specific exemptions from the overtime requirements
  • Salary Level: Qualifying for exemptions and nonexempt employees
  • Deductions from Pay: Deducting for violations, disciplinary reasons, sick leave, or personal leave


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