How to Complete the Illinois Schedule CR Income Tax Form

The Illinois Schedule CR is the form you attach to your IL-1040 to claim a credit against your Illinois income tax for income taxes you already paid to another state, the District of Columbia, Puerto Rico, a U.S. territory, or a local government within any of those jurisdictions. It prevents you from paying full state-level tax twice on the same income. It will not always wipe out that second tax bill, though, because the credit is capped at the amount Illinois would have charged on that same income.

Who Can Claim the Credit

Full-year Illinois residents qualify when they earned income outside the state and paid income tax to that other jurisdiction on it. Part-year residents can claim it too, but only for income earned and taxed elsewhere during the portion of the year they lived in Illinois.¹ The tax has to be a mandatory state or local income tax. Voluntary payments, estimated payments you made but didn’t actually owe, and penalties don’t count.

Qualifying taxes include income taxes paid to any U.S. state, the District of Columbia, Puerto Rico, U.S. territories, and political subdivisions like cities or counties that impose their own income taxes.² Federal income taxes do not qualify. Neither do taxes paid to foreign countries.

Partners in a partnership and shareholders in an S-corporation can claim their share of tax the entity paid to another state on their behalf. Your allocable share equals the entity-level tax paid to the other state multiplied by the ratio of your share of the entity’s income in that state to the entity’s total income in that state.²

When Schedule CR Is Not the Right Fix

Illinois has reciprocal tax agreements with Iowa, Kentucky, Michigan, and Wisconsin. These agreements cover wages, salaries, commissions, and similar employee compensation only.³ If all your out-of-state income falls under a reciprocal agreement, the other state shouldn’t be taxing it, and you don’t need Schedule CR at all. You file an exemption form with the reciprocal state so it stops withholding.

If a reciprocal state withheld tax from your paycheck anyway, Schedule CR is not the remedy. You cannot claim a credit on Schedule CR for tax that shouldn’t have been withheld in the first place. You need to file a return with that other state to get the erroneous withholding refunded. This catches people who see Indiana or Wisconsin withholding on a W-2 and assume Illinois will sort it out through Schedule CR.

Reciprocal agreements do not cover investment income, rental income, business income, or capital gains. If you earned those in a reciprocal state and paid tax on them there, Schedule CR applies to that non-wage income.

What to Gather Before You Start

The other state’s completed tax return. You need the final tax liability from each state where you paid income tax, not just the withholding amount from your W-2. That final liability is the single most important number on Schedule CR.
Your federal return. Schedule CR references your federal adjusted gross income and specific income lines from the federal 1040 to separate Illinois-source income from non-Illinois income.
W-2s and 1099s. Boxes 15, 16, and 17 on the W-2 show the state, state wages, and state withholding, which helps verify which income was taxed where.
Your IL-1040. Several Schedule CR lines pull directly from your Illinois return, including total Illinois income and your Illinois tax liability.
Publication 111. The Illinois Department of Revenue publishes this companion guide with state-by-state comparison formulas showing which lines from other states’ returns correspond to the figures Schedule CR needs.

Working Through the Six Steps

Schedule CR is organized into six steps. Full-year residents skip Step 5. Part-year residents complete every step.

Step 1: Identification

Enter your name and Social Security number exactly as they appear on your IL-1040. If you’re attaching Schedule CR to an amended return (IL-1040-X), check the box at the top of the form.²

Step 2: Separate Illinois From Non-Illinois Income

Most of the real work happens here. Step 2 has two columns. Column A holds total amounts matching your federal return or IL-1040 figures. Column B holds only the non-Illinois portion of each income category. You walk through each type of federal income (wages, interest, business income, capital gains, and so on) and isolate how much came from outside Illinois. Part-year residents use the amounts from Schedule NR, Column B as their Column A entries.²

The non-Illinois portion in Column B follows Illinois sourcing rules, not the other state’s. States don’t always agree on where a piece of income originates, and Illinois determines sourcing based on its own Article 3 provisions.¹

Step 3: Illinois Additions and Subtractions

Step 3 applies Illinois-specific additions and subtractions to arrive at your base income. These are the same adjustments from your IL-1040, but applied only to the non-Illinois portion of your income. You’re calculating what your Illinois tax base would look like if only the out-of-state income counted.

Step 4: Calculate the Decimal

Step 4 produces a decimal: the ratio of your non-Illinois base income to your total Illinois base income. That decimal is the credit-limiting mechanism. If 30 percent of your base income came from outside Illinois, the decimal is 0.30, and your credit cannot exceed 30 percent of your Illinois tax.

Step 5: Part-Year Residents Only

Part-year residents complete Step 5 to further adjust the credit so it reflects only the period they lived in Illinois. The instructions walk through an additional ratio calculation. If you paid $1,000 in tax to another state and your Illinois-resident income was $40,500 out of $54,000 total, the allowable credit would be $750.² Full-year residents skip this step.

Step 6: Figure the Credit

Step 6 ties everything together. You enter the total income tax you actually paid to all other states, minus any credits those states gave you, except for credit based on payments you actually made such as withholding or estimated payments. The credit you claim on your IL-1040 is the lesser of the tax you paid to the other state or the amount of Illinois tax attributable to that non-Illinois income (your Illinois tax multiplied by the Step 4 decimal).¹ If you earned income in multiple states, each gets its own row, but the overall credit still cannot exceed the cap.

Why Your Credit May Be Smaller Than the Tax You Paid

The cap surprises people when the other state’s tax rate runs higher than Illinois’s flat 4.95 percent.⁴ Say you paid 6.5 percent to another state on $50,000 of income. That’s $3,250. Illinois would have charged only $2,475 on the same $50,000 at 4.95 percent. Your credit is limited to $2,475. The remaining $775 doesn’t carry forward and isn’t refundable. It’s the cost of the other state having a higher rate.

If you paid tax to a state with a lower rate than Illinois, the credit covers everything you paid there, and you owe Illinois the difference. Either way, you end up paying at least the Illinois rate on your total income.

Submitting Schedule CR

Schedule CR goes in with your IL-1040. How you submit depends on your filing method.

Paper Filing

Place Schedule CR directly behind your IL-1040 before mailing. If you owe a balance, send it to Illinois Department of Revenue, PO Box 19027, Springfield, IL 62794-9027. If you’re due a refund or owe nothing, mail to Illinois Department of Revenue, PO Box 19041, Springfield, IL 62794-9041.⁵

Electronic Filing

MyTax Illinois lets individuals file the IL-1040 online, but it has real eligibility limits. For the 2025 filing season, MyTax Illinois does not support returns that claim nonrefundable credits other than the property tax credit, the K-12 education expense credit, or the Volunteer Emergency Worker credit.⁶ Schedule CR is a nonrefundable credit not on that list, so you likely cannot file it through MyTax Illinois directly. Commercial tax software that supports Illinois e-filing is the more reliable route if you want to file electronically.

After You File

Electronically filed returns with refunds are typically processed in about four weeks. Paper returns take four to eight weeks.⁷ You can track refund status through the Department of Revenue’s website.

The Department may ask for a copy of the other state’s return to verify the tax you claimed. If something doesn’t line up, you’ll get a notice by mail explaining what documentation is needed. Keep copies of your IL-1040, Schedule CR, every other state’s return, and supporting W-2s and 1099s for at least three years. That’s the standard window for the Department to review a return.

Pass-Through Entity Tax

Illinois allows partnerships and S-corporations to elect to pay a 4.95 percent entity-level income tax under the Pass-through Entity (PTE) tax.⁸ If your entity operates in multiple states and pays income tax to another state on your behalf, you can include your share of that payment on Schedule CR using the ratio described earlier: your share of the entity’s income in the other state divided by the entity’s total income in that state, multiplied by the entity-level tax paid there.

The arithmetic gets complicated when the entity also elects PTE tax in the other state. Other states’ PTE taxes are still income taxes imposed on income, so they generally qualify for the Schedule CR credit. The interplay between entity-level elections in two states and the resulting credits on your personal return is worth a close look, or a conversation with a tax professional who handles multi-state pass-through returns.

1
Illinois General Assembly. Illinois Code 35 ILCS 5/601 – Payment on Due Date of Return
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Illinois Department of Revenue. 2025 IL-1040 Schedule CR Instructions
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Wisconsin Department of Revenue. Individual Income Tax Working in Another State
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Illinois Department of Revenue. Income Tax Rates
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Illinois Department of Revenue. 2025 IL-1040 Form Instructions
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Illinois Department of Revenue. File Form IL-1040, Individual Income Tax Return, on MyTax Illinois
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Illinois Department of Revenue. Where’s My Refund?
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Illinois Department of Revenue. What Is the Pass-through Entity (PTE) Tax?