Schedule M IL-1040 Instructions
General Information
What is the purpose of Schedule M?
Schedule M, Other Additions and Subtractions, allows you to figure the total amount of additions you must include on Form IL-1040, Individual Income Tax Return, Line 3 and subtractions you may claim on Form IL-1040, Line 9.
May I subtract my out-of-state income?
No, you may not subtract your out-of-state income. However, if you are filing as a resident or a part-year resident, you may be allowed to take a credit against Illinois Income Tax for income tax you paid to another state. See the instructions for Form IL-1040, Line 19, and Schedule CR, Credit for Tax Paid to Other States.
What other income is not allowed as a subtraction?
You may not subtract anything that is not listed on Schedule M. For example, you may not subtract
- unemployment compensation. Unemployment compensation included in your federal adjusted gross income is fully taxable to Illinois.
- gambling losses. Illinois does not allow a deduction for gambling losses.
- your federal itemized deductions from U.S. 1040 Schedule A, Itemized Deductions.
- any wages reported on your federal return. If you believe the wages reported on the Form W-2, Wage and Tax Statement, you received from your employer are incorrect, you must obtain a corrected Form W-2 or a statement from your employer, on company letterhead, stating that your Form W-2 was incorrect. We will not accept a letter from you or your tax preparer.
What must I attach to Form IL-1040?
If you enter an amount on Form IL-1040, Line 3 or Line 9, you must attach Schedule M and any other required documentation listed in the “Step-by-Step Instructions” of this schedule to your Form IL-1040.
What if I need additional forms or schedules?
If you need additional forms or schedules
- visit our web site at tax.illinois.gov,
- call our 24-hour Forms Order Line at 1 800 356-6302, or
- write to us at P.O. Box 19010, Springfield, Illinois 62794-9010.
You may use our toll‑free number to order forms 24 hours a day, 7 days a week.
What if I need additional assistance?
If you need assistance,
- visit our web site at tax.illinois.gov,
- call our Taxpayer Assistance Division at 1 800 732-8866 or 217 782-3336, or
- call our TDD (telecommunications device for the deaf) at 1 800 544-5304.
Our office hours are 8 a.m. to 5 p.m. Monday through Friday.
Step-by-Step Instructions
Step 1: Provide the following information
Write your name and Social Security number as shown on your Form IL-1040.
Step 2: Figure your additions for Form IL-1040, Line 3
Line 1 — Your child’s federally tax-exempt interest and dividend income
Write the amount of any federally tax-exempt interest and dividends earned by your child if you elected to report your child’s interest and dividend income on U.S. Form 8814, Parents’ Election To Report Child’s Interest and Dividends.
Line 2 — Distributive share of additions from a partnership, S corporation, estate, or trust
Include your distributive share of additions received from a partnership, S corporation, estate, or trust. The partnership, S corporation, estate, or trust is required to notify you of your share of this type of income. An Illinois entity will send you an Illinois Schedule K-1-P, Partner’s or Shareholder’s Share of Income, Deductions, Credits, and Recapture, or Illinois Schedule K-1-T, Beneficiary’s Share of Income and Deductions, specifically identifying your income.
Attach: a copy of Illinois Schedule K-1-P or Schedule K-1-T.
Line 3 — Medical Care Savings Account withdrawals
Include withdrawals made and interest earned, during the tax year, from your Medical Care Savings Account that are not included in your adjusted gross income on Form IL-1040, Line 1. Include this income only if your withdrawals were for purposes other than those allowed under the Medical Care Savings Account Act.
Line 4 — Lloyds plan of operations loss
Add back any loss that you included in your adjusted gross income from a Lloyds plan of operation if that loss was reported on your behalf on Form IL-1023-C, Composite Income and Replacement Tax Return.
Line 5 — IRC Section 529 college savings plans earnings
Include earnings distributed from IRC Section 529 college savings and tuition programs if these earnings are not included in your adjusted gross income on Form IL-1040, Line 1.
Note: Do not include earnings if they were rolled over tax-free into another program.
Also, do not include earnings received from the following, which are exempt from tax:
- “Bright Start” College Savings Pool
- “Bright Directions” College Savings Pool
- “College Illinois” Prepaid Tuition Program
- Qualified IRC Section 529 tuition programs that
- comply with the College Savings Plans Network’s disclosure principles, and
- annually inform Illinois residents and those distributing the program that in-state programs exist.
Line 6 — Special depreciation addition
Write the addition amount from Form IL-4562, Special Depreciation, Step 2, Line 4. See Form IL-4562 instructions for more information.
Note: Do not include your distributive share of any special depreciation addition from a partnership, S corporation, trust, or estate on this line. Your distributive share of additions should be included on Schedule M, Line 2.
Attach: Form IL-4562.
Line 7 — Business expense recapture (nonresidents only)
If you reported income from an asset or activity as business income in prior years and reported any income from that asset or activity as nonbusiness income on this Schedule M or on your Schedule NR for this year, include on this line all deductions you claimed for expenses connected with that income in this year and in your two most recent tax years.
Line 8 — Recapture of deductions for contributions to college savings plans transferred to an out-of-state plan
Write the smaller of
- the amount of deductions you claimed for amounts contributed to an Illinois college savings plan, or
- the amount you transferred during 2007 from the Illinois plan to an out-of-state plan.
Line 9 — Other income
Include any other amounts that you are required to add to your federal adjusted gross income to arrive at your Illinois base income. Please include a detailed description of each addition on the line provided or on an attached statement.
Line 10
Add Lines 1 through 9. Write the amount here and on Form IL-1040, Line 3.
Step 3: Figure your subtractions for Form IL-1040, Line 9
Line 11 — Contributions you made to “Bright Start” and “Bright Directions” College Savings Pools and “College Illinois” Prepaid Tuition Program
Write the amount of contributions you made during the tax year to the “Bright Start” and “Bright Directions” College Savings Pools and the “College Illinois” Prepaid Tuition Program. You may not subtract contributions made to any other college savings program. If your contributions were made by rolling over funds from another college savings program into a “Bright Start,” “Bright Directions,” or “College Illinois” account, you may not subtract any income that was earned in the other savings program and rolled over.
Note: The total of Lines 11a, 11b, and 11c may not exceed $10,000 ($20,000 if married filing a joint return).
Line 12 — Distributive share of subtractions from a partnership, S corporation, trust, or estate
Write the amount of your distributive share of subtractions from a partnership, S corporation, trust, or estate. The partnership, S corporation, trust, or estate is required to notify you of your share of any of these subtractions. You may write the amount of such subtractions only if you are notified. An Illinois entity will send you an Illinois Schedule K-1-P or Illinois Schedule K-1-T specifically identifying your subtractions.
Note: Do not include any distributive share of subtractions from a partnership, S corporation, trust, or estate that are included in Line 21 of this schedule.
Attch: a copy of Illinois Schedule K-1-P or Schedule K-1-T or a copy of the notification (which includes the Federal Employer’s Identification Number) furnished to you that specifically details the amount of the subtraction being claimed as your distributive share.
If your distributive share is from a grantor trust, attach a detailed statement that identifies the grantor trust.
Line 13 — Restoration of amounts held under claim of right
Write the amount equal to the deduction used to compute the federal tax credit for restoration of amounts held under claim of right under the Internal Revenue Code Section 1341.
Line 14 — Contributions to a job training project
Write the amount equal to the contributions you made under the Tax Increment Allocation Redevelopment Act to a job training project. For more information, refer to Informational Bulletin FY 90-40.
Line 15 — Expenses related to federal credits or federally tax-exempt income
Write the amount of any expenses that were disallowed as federal deductions under the Internal Revenue Code Section 171(a)(2) or 265 because they are related to income that is exempt from federal tax which you added back on Form IL-1040 Line 2 or because a credit was allowed for the expenses.
Line 16 — Home Ownership Made Easy Program interest
If you bought a home under the Home Ownership Made Easy (HOME) Program, you may subtract the total amount of interest income you earned over the life of your HOME account, in the tax year that you bought your home.
Line 17 — Special Depreciation subtraction
Write the subtraction amount from Form IL-4562, Step 3, Line 10. See Form IL-4562 instructions for more information.
Note: Do not include your distributive share of any special depreciation subtraction from a partnership, S corporation, trust, or estate on this line. Your distributive share of subtractions should be included on Schedule M, Line 12.
Attach: Form IL-4562.
Lines 18 and 19
Follow the instructions on Schedule M.
Line 20 — August 1, 1969, valuation limitation
Write the amount of your August 1, 1969, valuation limitation from Schedule F, Gains from Sales or Exchanges of Property Acquired Before August 1, 1969, Line 17.
Attach: Schedule F and copies of required federal forms.
Line 21 — Enterprise and river edge redevelopment zone and high impact business dividend subtraction
Write the amount from Illinois Schedule 1299-C, Income Tax Subtractions and Credits, Step 1, Line 7.
Attach: Schedule 1299-C.
Line 22 — Recovery of items previously deducted on U.S. 1040, Schedule A
Write the amount of recovery of items (including refunds of any state and local income taxes, other than Illinois) that you deducted on your U.S. 1040, Schedule A, Itemized Deductions, in a prior year. You must have included these items on your U.S. 1040, Page 1, and your Form IL-1040, Line 1, for this tax year.
Attach: a copy of U.S. 1040, Page 1, and any schedule or attachment to your U.S. 1040 that shows the nature and source of this deduction.
Line 23 — Ridesharing money and other benefits
Write the amount of ridesharing money and benefits (other than salary) received by a driver in a ridesharing arrangement using a motor vehicle if these amounts are included in your Form IL-1040, Line 1.
Line 24 — Payment of life insurance, endowment, or annuity benefits received
Write the amount of payment of life insurance, endowment, or annuity benefits received before the time they would have ordinarily been paid as an indemnity for a terminal illness. This amount must have been included in your Form IL-1040, Line 1.
Line 25 — Employer’s contributions made on your behalf to an account established under the Medical Care Savings Account Act and the interest earned
Write the amount of your employer’s contributions made on your behalf to an account established under the Medical Care Savings Account Act and the interest earned on this account. You must have included this amount in your Form IL-1040, Line 1.
Line 26 — Lloyds plan of operations income if reported on your behalf on Form IL-1023-C
Write the income included in your adjusted gross income from a Lloyds plan of operations if that amount was reported on your behalf on Form IL-1023-C, Composite Income and Replacement Tax Return.
Line 27 — Illinois Pre-Need Cemetery Sales Act trust income
Write the amount of income earned by certain trust accounts established under the Illinois Pre-Need Cemetery Sales Act. You may claim this amount only if this income is included on your Form IL-1040, Line 1 or Line 3.
Line 28 — Education loan repayments for primary care physicians
Write the amount of education loan repayments made for primary care physicians who agree to practice in designated shortage areas for a specified period of time under the terms of the Family Practice Residency Act. You may claim this amount only if this income is included on your Form IL-1040, Line 1 or Line 3.
Line 29 — Reparations or other amounts received as a victim of persecution by Nazi Germany
Write the amount of reparations or other amounts received as a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime that are included in your adjusted gross income. Also include any reparations or other amounts received as an heir of such victim that are included in your adjusted gross income.
Line 30 — Interest on tax-exempt obligations of state and local government
Write the amount of interest on obligations of Illinois state and local governments included on Form IL-1040, Line 1, 2, or 3. This amount is the net amount of any related bond premium amortization.
Interest from state and local government obligations is not exempt from Illinois Income Tax except where legislation has been specifically adopted to provide for an exemption.
The following is a list of securities that are exempt. However, income from these obligations is not exempt if you own them indirectly through owning shares in a mutual fund.
Securities exempt from Illinois Income Tax include
- Illinois Housing Development Authority bonds and notes (except housing-related commercial facilities bonds and notes)
- Export Development Act of 1983 bonds
- Illinois Development Finance Authority bonds, notes, and other evidence of obligation (only venture fund and infrastructure bonds)
- Quad Cities Regional Economic Development Authority bonds and notes (only those bonds declared exempt from taxation by the Authority)
- College Savings bonds
- Illinois Sports Facilities Authority bonds
- Higher Education Student Assistance Act bonds
- Illinois Development Finance Authority bonds issued under the Illinois Development Finance Authority Act, Sections 7.80 - 7.87
- Rural Bond Bank Act bonds and notes
- Illinois Development Finance Authority bonds issued under the Asbestos Abatement Finance Act
- Quad Cities Interstate Metropolitan Authority bonds
- Southwestern Illinois Development Authority bonds
- Illinois Finance Authority bonds issued under the Illinois Finance Authority Act, Sections 820.60 and 825.55 or the Asbestos Abatement Finance Act
For further information refer to Publication 101, Income Exempt from Tax, which explains and identifies income that is exempt from Illinois Income Tax.
Line 31 — Interest on tax-exempt obligations of non-U.S. governments
Write the amount of interest on obligations of non-U.S. governments included on Form IL-1040, Line 1, 2, or 3. This amount is the net amount of any related bond premium amortization.
Interest from non-U.S. government obligations is not exempt from Illinois Income Tax except where legislation has been specifically adopted to provide for an exemption.
Non-U.S. securities exempt from Illinois Income Tax include
- Bonds issued by the government of Guam
- Bonds issued by the government of Puerto Rico
- Bonds issued by the government of the Virgin Islands
- Bonds issued by the government of American Samoa
- Bonds issued by the government of the Northern Mariana islands
- Mutual mortgage insurance fund bonds
Line 32 — Your child’s interest reported on U.S. Form 8814
Write the amount of your child’s income that you reported on U.S. Form 8814, Parents’ Election To Report Child’s Interest and Dividends, that would be allowed as a subtraction on your Form IL-1040, Line 8 or on Lines 30 or 31 of this schedule if you had received it rather than your child. You may claim this amount only if your child’s income is included on your Form IL-1040, Line 1 or Line 3.
Line 33 — Railroad unemployment compensation
Write the amount of any railroad unemployment compensation that is included in your Form IL-1040, Line 1.
Line 34
Add Lines 19 through 33. Write the amount here and on Form IL-1040, Line 9.
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