Schedule K-1-P(4): Investment Partnership Withholding Calculation for Nonresident Partners (2025)
Illinois · Illinois DOR · Used for tax years 2025
Illinois Schedule K-1-P(4) is used by investment partnerships filing Form IL-1065 to calculate withholding for nonresident partners. It records a partner’s share of income from other partnerships allocable to Illinois, credits used to offset withholding, and total investment part
Who files this form
Investment partnerships filing Form IL-1065 must complete this schedule for each nonresident partner, except a partner who is:
- Exempt from tax under IRC Section 501(a) or IITA Section 205; or
- A retired partner whose distributions are exempt 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 2025 schedule applies to tax years ending on or after December 31, 2025, and before December 31, 2026. Keep the schedule with your income tax records rather than routinely submitting it.
What you'll need
Have the following information ready:
- Your investment partnership’s name as shown on Form IL-1065 and its federal employer identification number (FEIN).
- The nonresident partner’s name, Social Security number or FEIN, and organization type.
- The partner’s share of Illinois-apportioned business income and Illinois-allocated nonbusiness income from other partnerships, as described on Lines 6 and 7.
- The partner’s share of income from other partnerships allocable to Illinois before credits for Line 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
- Identify the investment partnership and nonresident partner in Steps 1 and 2.
- Enter the income amounts in Step 3. For Line 9, multiply Line 8 by the rate for the partner’s organization type: 4.95% for a partnership, S corporation, individual, or estate; 6.45% for a trust; or 9.5% for a corporation.
- Enter applicable credits on Lines 10 through 12 and add them on Line 13. Subtract Line 13 from Line 9 to calculate withholding on Line 14.
- Report Line 14 on the partner’s Schedule K-1-P, Step 7, Line 55, and on your Form IL-1065, Schedule B, Section B, Line J, on that partner’s line.
Keep a copy for each nonresident partner with your income tax records. Do not send Schedule K-1-P(4) to your partners or submit it to the Illinois Department of Revenue unless the department specifically requests it.
Common mistakes
- Completing this schedule for a resident partner. The form says not to do so.
- Treating Form IL-1000-E as an exemption from investment partnership withholding. It does not provide that exemption.
- Using credits that were not passed through in the current year to offset withholding.
- Sending this schedule to partners or submitting it to the Illinois Department of Revenue without a specific request.
- Completing Lines 6 and 7 without consulting the instructions. The form specifically says to read the instructions before completing those lines; no instructions were provided here.
Questions people ask
Does Form IL-1000-E exempt an investment partnership from this withholding?
No. The form states that Form IL-1000-E, Certificate of Exemption for Pass-through Withholding, does not exempt an investment partnership from investment partnership withholding.
Which withholding rate applies to a trust partner?
Multiply Line 8 by 6.45% (.0645) and enter the result on Line 9.
Where do I report the final withholding amount?
Report Line 14 on the partner’s Schedule K-1-P, Step 7, Line 55, and on Form IL-1065, Schedule B, Section B, Line J, on the line for that partner.
Should I give this schedule to the partner?
No. Keep it with your income tax records. Send it to the Illinois Department of Revenue only if the department specifically requests it.