Schedule K-1-P(4): Investment Partnership Withholding Calculation for Nonresident Partners (2024)
Illinois · Illinois DOR · Used for tax years 2024
Illinois Schedule K-1-P(4) is used by investment partnerships filing Form IL-1065 to calculate withholding for nonresident partners. It calculates withholding on a partner’s share of income from other partnerships allocable to Illinois, reduced by allowable credits.
Who files this form
Investment partnerships filing Form IL-1065 must complete Schedule K-1-P(4) for each nonresident partner, except a partner who is:
- Exempt from tax under IRC Section 501(a) or IITA Section 205.
- A retired partner whose distributions are exempt from tax under IITA Section 203(a)(2)(F).
The form also requires a schedule for each partner that is a partnership or S corporation. Do not complete it for a resident partner.
The 2024 schedule applies to tax years ending on or after December 31, 2024, and before December 31, 2025.
What you'll need
Have the following information available to complete the schedule:
- Your investment partnership’s name as shown on Form IL-1065 and federal employer identification number (FEIN).
- The nonresident partner’s name, Social Security number or FEIN, and organization type.
- The partner’s share of income from other partnerships allocable to Illinois, as requested on Lines 6 through 8.
- Amounts of Illinois income tax credits, Illinois replacement tax investment credits, and pass-through entity (PTE) tax credits used to offset the partner’s withholding.
Only credits passed through in the current year may offset investment partnership withholding.
How to file
Keep Schedule K-1-P(4) with your income tax records. Do not send it to your partners or submit it to the Illinois Department of Revenue unless the department specifically requests it. If requested, you must provide it.
Report the total withholding from Line 14 in both places:
- The partner’s Schedule K-1-P, Step 7, Line 55.
- Your Form IL-1065, Schedule B, Section B, Line J, on the line for that partner.
Common mistakes
- Do not complete this schedule for a resident partner.
- Do not treat Form IL-1000-E, Certificate of Exemption for Pass-through Withholding, as an exemption from investment partnership withholding. It does not provide that exemption.
- Use only credits passed through in the current year to offset investment partnership withholding.
- Keep a copy for each nonresident partner. Do not send the schedule to partners or to the Illinois Department of Revenue unless the department specifically requests it.
- Read the referenced instructions before completing Lines 6 and 7, as the form directs.
The form warns that failure to provide required information could result in a penalty.
Questions people ask
What withholding rate applies to each partner type?
For Line 9, multiply Line 8 by 4.95% for a partnership, S corporation, individual, or estate; 6.45% for a trust; or 9.5% for a corporation.
Which credits does the schedule list as offsets?
Lines 10 through 12 list Illinois income tax credits, Illinois replacement tax investment credits, and PTE tax credits. Only credits passed through in the current year are allowed to offset investment partnership withholding.
How is the final withholding amount calculated?
Add Lines 10 through 12 and enter the total on Line 13. Subtract Line 13 from Line 9 and enter the result on Line 14. This is the total investment partnership withholding for the partner.
Does Form IL-1000-E remove the withholding requirement?
No. The form states that Form IL-1000-E will not exempt an investment partnership from investment partnership withholding.