Money & Debt

Income taxes are taxes on income. Income can include money or the value of property, goods, or services a person receives.

The federal government and the State of Illinois both collect income taxes. The federal and state tax agencies are separate:

• The Internal Revenue Service (IRS) collects federal income taxes, and
• The Illinois Department of Revenue (IDOR) collects Illinois income taxes.

Not everyone must file a tax return each year. However, people who are required to file must report all taxable income. A person's gross income minus deductions and exemptions This is true even if they do not receive tax forms such as a W-2 or 1099 for that income.

Taxable income means money, property, goods, and services that:

• A person receives, and
• The law allows the government to tax.

Taxable income is a very broad category. Examples of taxable income include:

• Wages The amount of money that a person is paid for work they do from a job,
• Freelance or gig payments,
• Rent payments received by a property owner,
• Money earned online,
• Self-employment and farm income, and
• Unlawful sources of income, like bribes and money received from illegal activities.

Taxable income can also come from barter or trade. People may have to pay taxes on the value of property, goods, or services they receive.

For more information, read:

• The IRS (federal) guide to Taxable income, and
• The IDOR (Illinois) Taxable Income page.

Adjusted gross income (AGI) is a number used to calculate federal income taxes. A person’s AGI:

• Represents their income for a particular year,
• May be different from the total amount of money they received that year, and
• Is used to determine whether they qualify for certain deductions, tax credits, or benefit programs.

In Illinois, the federal AGI is used to calculate a person’s taxable income, but with state-specific additions and subtractions.

Learn more in:

• The IRS (federal) Definition of adjusted gross income page, and
• The IDOR (Illinois) explanation of Taxable Income.

No, some U.S. citizens do not have to file an income tax return. This happens if:

• Their income is below federal and Illinois filing requirements for that tax year,
• They do not have self-employment income that requires filing, and
• No other IRS rule requires them to file.

Even if a person is not required to file, filing a tax return may allow them to receive money they are owed. Some benefit programs may also require a recent tax return as part of the application process.

To determine whether filing is required, review:

• The IRS (federal) Check if you need to file a tax return page, and
• The IDOR (Illinois) Filing Requirements.

Only spouses can file taxes together. This is called married filing jointly. A tax filing status for a married couple that includes all income and deductions for both people Filing together is different from claiming someone as a dependent. A person who relies on another for support, such as a child or person with a disability People who are claimed as a dependent may still have to file their own tax return.

People may file their taxes:

• Individually, if they are not legally married,
• Together with their spouse (married filing jointly),
• Separately from their spouse while still married (married filing separately), or
• As head of household, A tax filing status for someone who is unmarried. They pay at least half of household expenses and live with a dependent. if they qualify under IRS rules.

A head of household is a person who paid more than half of the cost of keeping up a home for themselves and a qualifying dependent. Head of household status may apply to some married people who live apart from their spouse and support a qualifying dependent.

Whether someone can be claimed as a dependent A person who relies on another for support, such as a child or person with a disability depends on several IRS rules. These rules include the person’s age, student status, income, relationship to the taxpayer, and who provides their financial support.

Dependents may include:

• Children under age 19,
• Full-time college students under age 24 who do not provide more than half of their own financial support,
• Certain relatives who qualify under IRS income and support rules (also called “qualifying relatives”), and
• People of any age who are permanently and totally disabled, if they meet IRS rules.

Only one person can claim a child as a dependent for tax purposes. The IRS provides rules that determine who may claim the child when more than one person qualifies.

A person who is claimed as a dependent might still have to file their own tax return if their income meets IRS filing requirements. Use the IRS Do I need to file a tax return? tool for guidance.

A person who is not claimed as a dependent may also have to file their own tax return. Some people call this filing independently or filing as an independent taxpayer. The term "independent taxpayer" is not a formal IRS category. 

Read the IRS guidance on Dependents and use their Whom may I claim as a dependent? interview for more details.

The IRS decides filing status A person's family situation for tax purposes: Single, married filing jointly, married filing separately, head of household, or qualifying widow. for federal income taxes based on marital status on December 31 of the tax year.

This means:

• If two people are spouses on December 31, they must file as married for that tax year, and
• If a divorce is finalized by December 31, each former spouse files individually for that tax year.

Married couples may file jointly or separately unless one spouse qualifies for head of household A tax filing status for someone who is unmarried. They pay at least half of household expenses and live with a dependent. status. When married couples file separately:

• They must decide which spouse will claim dependents,
• Some tax credits and deductions are limited, and
• Some tax credits and deductions do not apply.

People who marry or divorce during the tax year may also need to:

• Update their name or address with the Social Security Administration and the IRS,
• Update tax withholding When an employer keeps some of a person's paycheck to cover their taxes with their employer, and
• Choose a new tax filing status.

For more information, review the IRS (federal) resources:

• What is my filing status? (interactive tool),
• Managing your taxes after a life event,
• A tax checklist for newly married couples, and
• Some tax considerations for people who are separating or divorcing.

Income taxes are due in the year after the income was received. Generally, federal and state income taxes are due April 15. If April 15 falls on a weekend or holiday, the deadline is usually the next business day.

Some people must make estimated tax payments during the year they receive the income instead of paying all taxes at once by April 15. This often applies to people who receive pay without taxes being withheld, such as independent contractors, freelancers, and gig workers.

People who cannot finish filing their taxes by April 15 can request an extension. Tax payments may still be due by the original deadline. Learn more by reading:

• The IRS (federal) explanation of how to Get an extension to file your tax return, and
• The IDOR (Illinois) Due Date/Extension to File Income Tax Return page.

For most individuals, a tax year refers to the calendar year in which income was received.

Taxes for that income are usually filed the following year. For example, tax year 2025 includes income received between January 1, 2025, and December 31, 2025. 

Depending on how a person receives income, they may not receive their tax documents for tax year 2025 until 2026. The deadline for filing most 2025 taxes is April 15, 2026. However, some independent contractors, freelancers, and gig workers will have made estimated tax payments for the 2025 tax year during calendar year 2025.

Yes, people can file or amend tax returns for prior tax years. Time limits apply. Typically, people can file an amended return within the later of:

• 3 years from the date of filing, or
• 2 years from the date they paid the tax.

Filing a late return generally requires using the forms and instructions for the tax year that the income was received. Learn more about filing past-due tax returns from the IRS (federal) File past‑due tax returns guide.

An amended return corrects information on a return that was already filed. For example, a person may change income amounts, filing status, A person's family situation for tax purposes: Single, married filing jointly, married filing separately, head of household, or qualifying widow. deductions, or credits. To learn about filing an amended return, visit:

• The IRS (federal) explanation of when to File an amended return, and
• The IDOR (Illinois) Amending my return (Form IL‑1040) page.

Income taxes are based on the amount of taxable income A person's gross income minus deductions and exemptions a person received during the previous year.

Tax brackets group taxable income into ranges. Each range has a tax rate. The rate applies only to the income in that range. A person can pay one tax rate on part of their income and a different tax rate on another part. 

Read more from:

• The IRS (federal) page on Federal income tax rates and brackets, and
• The IDOR (Illinois) table of  Income Tax Rates.

Tax withholding is when an employer takes part of a worker’s paycheck and sends it directly to the government to pay income taxes.

Workers whose employers withhold income taxes usually fill out a Form W-4:

• When they start a job, and
• When they want to update their tax withholding.

The form tells the employer how much federal income tax to withhold from each paycheck. Learn more from the IRS page About Form W-4, Employee's Withholding Certificate.

The amount listed on the W-4 guides how much the employer withholds. It does not decide the final amount of tax a person owes. The final amount is calculated when the person files a tax return. A person may need to pay additional taxes or receive a refund if too much tax was withheld.

Independent contractors, freelancers, and gig workers usually do not have income taxes withheld from their pay. They must keep records of their income and work-related expenses and may need to make estimated tax payments during the year.

Estimated taxes are usually paid four times a year. Learn about paying estimated taxes from:

• The IRS (federal) guide to When to Pay Estimated Tax, and
• The IDOR (Illinois) Pub-105, Illinois Estimated Payments Requirements for Individuals and Businesses.

Records can include:

• All income received,
• Forms such as 1099-K, 1099-MISC, or 1099-NEC, and
• Receipts for money spent to perform work, such as gas, equipment, or required supplies.

More information about gig worker taxes is available from the IRS (federal) Gig economy tax center.

1099 forms are information statements that some businesses provide to people who received certain payments from them.

These forms report certain payments to the government and the taxpayer. A person may also receive a copy for their records. Do not rely only on these forms to track income. Even if a person does not receive a 1099 form, income can still be taxable and must be reported on a tax return.

Some common 1099 forms include:

• Form 1099-K, which reports certain payments made through payment cards, payment apps, or online marketplaces,
• Form 1099-MISC, which reports certain types of miscellaneous payments, such as prizes, and
• Form 1099-NEC, which reports some nonemployee compensation, such as payments totaling more than $600 for freelance or contract work provided to a business during the previous year.

Learn more from the IRS (federal) pages:

• Understanding your Form 1099-K,
• About Form 1099-MISC, Miscellaneous Information, and
• About Form 1099-NEC, Nonemployee Compensation.

An Earned Income Tax Credit (“EITC”) is a tax benefit for qualifying filers who:

• Earn income from work, such as working for an employer or operating a business or farm,
• Have limited work and investment income, and
• File taxes, even if they do not owe any tax payments.

The EITC program has detailed eligibility rules. Qualifying Illinois residents may receive both federal and state EITC benefits. Learn more from:

• The IRS (federal) EITC Assistant, and
• The IDOR (Illinois) Earned Income Tax Credit (EITC) page.

The IRS guide to Disability and the Earned Income Tax Credit (EITC) provides additional information on how this benefit can help people who:

• Receive disability benefits, or
• Have a child who has a total and permanent disability.

A person who does not pay taxes that are due may end up owing:

• The taxes due,
• Interest on the taxes they owe, and
• A penalty, or fine, for not paying on time.

The IRS (federal) and IDOR (Illinois) have several methods of collecting unpaid taxes. These include taking funds from refunds, as well as tax liens and tax levies against a person’s property. Property can include money in a bank account or physical property, such as a house or a car.

When the government files a tax lien A claim against property that may be used to repay a debt against a person’s property, it means:

• The government has a legal claim that it is owed the unpaid taxes,
• The claim stays attached to the property until the tax debt is paid or resolved, and
• If the property is sold, the government can be paid from the sale money before the owner receives the remaining amount.

A tax levy means the government takes property or money to pay a tax debt. Levies are often used to collect unpaid taxes from wages The amount of money that a person is paid for work they do or bank accounts.

Learn more by reading:

• The IRS (federal) Collection process for taxpayers filing and or paying late and  Levy pages, and
• The IDOR (Illinois) Collection Process information. 

Yes, payment plans may be available for both state and federal income taxes. When payments are made according to the plan, the government generally does not pursue tax levies. They may still file tax liens.

Submit requests for an IRS (federal) income tax payment plan online, by phone, or by mail. Follow the instructions the IRS provides on their Payment plans; installment agreements page.

Payment plans are also available for Illinois income taxes. To set up a payment plan:

• Use the MyTax Illinois online portal, or
• Fax or mail IDOR a completed CPP-1 Payment Plan Request. 

Learn more from IDOR’s Payment Plan Information page.

When the IRS places unpaid federal income taxes into “Currently Not Collectible” (CNC) status, it means:

• The money is still owed to the federal government, and
• Collection is temporarily delayed.

Pausing collections through CNC status temporarily stops most active collection actions, such as bank account levies or seizing property like a car. The IRS can still file liens, take funds from future tax refunds, charge interest and penalties, or ask for payment.

To request CNC status, a person must:

• Call the IRS, and
• Submit any required papers, like a collection information statement on Form 433-A.

For more information, read the IRS (federal) instructions on how to Temporarily delay the collection process.

An “Offer in Compromise” (OIC) for federal income taxes is an agreement with the IRS to reduce the amount a person owes. The IRS only agrees to OIC proposals in very limited circumstances. 

To find out if an OIC proposal is an option, use the IRS Offer in Compromise Pre-Qualifier tool. For more information about the OIC process, read the IRS Offer in compromise FAQs.

Illinois does not have the same kind of OIC program as the IRS does for federal taxes. Instead, compromises (agreements) about tax debt are handled through an administrative tax dispute process. Learn more from the IDOR Your Options to Dispute Illinois Department of Revenue (IDOR) Deficiencies, Assessments, or Claim Denials page.

Use Get Legal Help to find free and low-cost local legal resources. Low-income taxpayers who need assistance resolving federal income tax problems with the IRS may also qualify for help from Low Income Taxpayer Clinics (LITC). 

People may qualify for free help with filing taxes through:

• An IRS Free File partner,
• The Volunteer Income Tax Assistance (VITA) program, and
• Ladder Up tax sites.