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Illinois Department of Revenue

2023 Schedule M IL-1040 Instructions

General Information
What is the purpose of Schedule M? ■ income received from Social Security benefits and retirement
Schedule M, Other Additions and Subtractions for Individuals, allows plans (including Illinois Teacher’s Retirement). Eligible retirement
you to figure the total amount of additions you must include on Form income should be subtracted on Form IL-1040, Line 5.
IL-1040, Individual Income Tax Return, Line 3 and subtractions you
What must I attach to Form IL-1040?
may claim on Form IL-1040, Line 7. If you enter an amount on Form IL-1040, Line 3 or Line 7, you must
May I subtract my out-of-state income? attach Schedule M and any other required documentation listed in
No, you may not subtract your out-of-state income. However, if you the “Step-by-Step Instructions” of this schedule to your Form IL-1040.
are filing as a resident or a part-year resident, you may be allowed Note: If you must attach Schedule K-1-P or K-1-T, be sure to attach
to take a credit against Illinois Income Tax for income tax you paid the Illinois schedule not the federal Schedule K-1 or any worksheets.
to another state. See the instructions for Form IL-1040, Line 15, and
Schedule CR, Credit for Tax Paid to Other States. What if I need additional assistance or forms?

What other income is not allowed as a subtraction? ● Visit our website at tax.illinois.gov for assistance, forms or
You may not subtract anything that is not listed on Schedule M. For
schedules.
example, you may not subtract
■ unemployment compensation. Unemployment compensation
included in your federal adjusted gross income, except railroad
unemployment, is fully taxable to Illinois.

■ gambling losses. Illinois does not allow a deduction for gambling ● Write us at Illinois Department of Revenue, P.O. Box 19001,
losses. Springfield, Illinois 62794-9001.
■ your federal itemized deductions from federal Form 1040 or ● Call 1 800 732-8866 or 217 782-3336 (TTY at 1 800 544-5304).
1040-SR, Schedule A, Itemized Deductions.
● Visit a taxpayer assistance office - 8:00 a.m. to 5:00 p.m.
■ any wages reported on your federal return. If you believe the (Springfield office) and 8:30 a.m. to 5:00 p.m. (all other offices),
wages reported on the Form W-2, Wage and Tax Statement, Monday through Friday.
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.

Step-by-Step Instructions

Step 1: Provide the following information Line 3 — Lloyd’s plan of operation loss
Enter your name and Social Security number as shown on your Add back any loss that you included in your adjusted gross income
Form IL-1040. from a Lloyd’s plan of operation if that loss was reported on your
Step 2: Figure your additions for Form IL-1040, Line 3 behalf on Form IL-1065, Partnership Replacement Tax Return.
Note: Enter your additions as positive amounts only. Line 4 — IRC Section 529 college savings, tuition, and ABLE
Line 1 — Your child’s federally tax-exempt interest and programs earnings
dividend income Include earnings distributed from Internal Revenue Code (IRC)
Enter the amount of any federally tax-exempt interest and dividends Section 529 college savings and tuition programs and ABLE
earned by your child if you elected to report your child’s interest and accounts, if these earnings are not included in your adjusted gross
dividend income on federal Form 8814, Parents’ Election To Report income on Form IL-1040, Line 1.
Child’s Interest and Dividends. Note: Do not include earnings if they were rolled over tax-free into
Line 2 — Distributive share of additions from a partnership, another program.
S corporation, trust, or estate Also, do not include earnings received from the following, which are
Include your distributive share of additions received from a exempt from tax:
partnership, S corporation, trust, or estate shown in Column A on ■ “Bright Start” College Savings Pool
your Schedule K-1-P or K-1-T. The partnership, S corporation, ■ “Bright Directions” College Savings Pool
trust, or estate is required to notify you of your share of this type of ■ “College Illinois” Prepaid Tuition Program
income. An Illinois entity will send you a Schedule K-1-P, Partner’s or
Shareholder’s Share of Income, Deductions, Credits, and Recapture, ■ Qualified IRC Section 529 tuition programs that
or Schedule K-1-T, Beneficiary’s Share of Income and Deductions, • comply with the College Savings Plans Network’s disclosure
specifically identifying your income. principles, and
Attach: a copy of Illinois Schedule K-1-P or K-1-T or a copy of the • annually inform Illinois residents and those distributing the
program that in-state programs exist.
notification furnished to you that specifically details the amount of
your distributive share of additions. ■ Qualified Illinois ABLE program earnings

Schedule M Instructions (IL-1040) (R-12/23) Printed by authority of the State of Illinois. Electronic only, one copy. Page 1 of 5

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Line 5 — Illinois special depreciation addition                           Step 3: Figure your subtractions for Form IL-1040, Line 7 
Enter the addition amount from Form IL-4562, Special Depreciation,        Note: Enter your subtractions as positive amounts only.
Step 2, Line 4. See Form IL-4562 instructions for more information. 
                                                                          Line 13 — Contributions you made to “Bright Start” College 
Note: Do not include your distributive share of any special 
                                                                          Savings Pool, “Bright Directions” College Savings Pool, and 
depreciation addition from a partnership, S corporation, trust, or 
estate on this line. Your distributive share of additions should be       “College Illinois” Prepaid Tuition Program.
included on Schedule M, Line 2.                                           You may subtract Contributions you made to “Bright Start” College 
                                                                          Savings Pool, “Bright Directions” College Savings Pool, and 
Attach: Form IL-4562.
                                                                          “College Illinois” Prepaid Tuition Program.  You may also subtract 
Line 6 — Business expense recapture (nonresidents only)                   contributions made on your behalf to one of these plans by your 
If you reported income from an asset or activity as business income       employer. You may not subtract contributions made to any other 
in prior years and reported any income from that asset or activity as     college savings program. If your contributions were made by rolling 
nonbusiness income on this Schedule M or on your Schedule NR,             over funds from another college savings program into a “Bright Start,” 
Nonresident and Part-Year Resident Computation of Illinois Tax, for       “Bright Directions,” or “College Illinois” account, you may not subtract 
this year, include on this line all deductions you claimed for expenses   any income that was earned in the other savings program and rolled 
connected with that income in this year and in your two most recent       over into your Illinois account.
tax years.                                                                Table 13 - For each row, enter the account number in Column A (do 
                                                                          not enter a name or other information in this column) and amount of 
Line 7 — Recapture of deductions for contributions to                     contribution made during the tax year to the “Bright Start” and “Bright 
Illinois college savings and ABLE plans transferred to an                 Directions” College Savings Pools and “College Illinois” Prepaid 
out-of-state plan                                                         Tuition Program in Column B. Enter one account per row.  Attach 
If you made a rollover from an Illinois plan to another state’s plan,     a separate page with any additional accounts, if needed. Add the 
enter the smaller of                                                      amounts in Column B and enter the total on Line 13a. 
■ the amount of deductions you claimed for amounts contributed            Check the box in Column C if your contribution was a gift.
  to an Illinois college savings or ABLE plan, minus any                  Attach: If you do not have the account number for a gift 
  deductions recaptured in prior years, or                                contribution, attach the following:
■ the amount you transferred during the tax year from the Illinois        ■  Copy of the cancelled check used to make the contribution, and
  plan to an out-of-state plan.                                           ■  Account holder’s name and address
Line 8 — Student-Assistance Contribution Credit                           Enter the lesser amount of Line 13a or $10,000 ($20,000 if married 
If you claimed a credit earned during your current year on Schedule       filing a joint return) on Line 13. 
1299-C, Income Tax Subtractions and Credits (for individuals), for        Note: Line 13 may not exceed $10,000 ($20,000 if married filing a 
contributions you made to a college savings plan on behalf of an          joint return). 
employee, enter the amount of the Student-Assistance Contribution         Line 14 — Distributive share of subtractions from a 
Credit (Credit code 5420) from Schedule 1299-C, Step 3, Column G,         partnership, S corporation, trust, or estate 
here.                                                                     Enter the amount of your distributive share of subtractions from 
Line 9 — Recapture of deductions for contributions to                     a partnership, S corporation, trust, or estate shown in Column A 
college savings and ABLE plans withdrawn for nonqualified                 on your Schedule K-1-P or K-1-T. The partnership, S corporation, 
expenses or refunded                                                      trust, or estate is required to notify you of your share of any of these 
                                                                          subtractions. You may enter the amount of such subtractions only if 
If you withdrew funds or received a refund of contributions from a        you are notified. An Illinois entity will send you a Schedule K-1-P or 
qualified tuition program or ABLE program, the funds were not used        K-1-T specifically identifying your subtractions.
for qualified expenses at an eligible institution, and the withdrawal 
or refund did not result from the death or disability of a beneficiary of Note: Your distributive share of subtractions from a partnership, 
the program, include the amount equal to the amount of deductions         S corporation, trust, or estate for
you claimed for contributions related to the nonqualified withdrawal      ■  contributions you made to a job training project should be 
or refund amount. Enter the smaller of                                       included on Line 14, not Line 16.
■ the amount of deductions you claimed for amounts contributed            ■  special depreciation should be included on Line 14, not Line 19.
  to an Illinois college savings plan or Illinois ABLE plan, minus        ■  U.S. government obligations should be included on Line 14, not 
  any amount recaptured on Line 7 for this year and any                      Line 22.
  deductions recaptured in prior years for that plan, or                  Your beneficiary share of payments from certain retirement plans and 
■ the refund or amount you withdrew during the tax year that was          retirement payments to retired partners reported on Schedule K-1-T 
  not used for qualified expenses in an eligible institution plus any     should be included on Line 14, not Form IL-1040, Line 5.
  refund of contributions. 
                                                                          Do not include any distributive share of river edge redevelopment 
Line 10 — RESERVED                                                        zone and high impact business dividend subtractions from a 
Line 11 — Other income                                                    partnership, S corporation, trust, or estate on this line. These 
Include any other amounts that you are required to add to your            subtractions should be included on Line 24 of this schedule. 
federal adjusted gross income to arrive at your Illinois base income.      Attach:  a copy of Illinois Schedule K-1-P or K-1-T, which identifies 
Please include a detailed description of each addition on the line        you as a partner, shareholder, or beneficiary and lists your Social 
provided or on an attached statement.                                     Security number, or a copy of the notification (which includes the 
                                                                          Federal Employer’s Identification Number) furnished to you that 
Note: For tax years ending on or after December 31, 2021, and 
beginning prior to January 1, 2026, add back an amount equal to           specifically details the amount of the subtraction being claimed as 
the amount of Pass-through entity tax you included on Line 51 of the      your distributive share. We will not accept a federal Schedule K-1 or 
Schedule CR.                                                              a Schedule K-1 worksheet.

Line 12 — Add Lines 1 through 11. Enter the amount here and on 
Form IL-1040, Line 3.
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If the notification you received from a partnership, S corporation, Line 21 — Military pay earned
trust, or estate identifies that entity as a grantor trust or disregarded Enter the amount of military pay that you received from the U.S.
entity and does not show you as the person who will report the Armed Forces or the National Guard of any state, or that you
income or loss from the grantor trust or disregarded entity, attach a received as a dual status military technician.
detailed statement explaining the situation. You may not subtract the following:
Line 15 — Restoration of amounts held under claim of right ■ combat pay that is not included in your federal adjusted gross
Enter the amount equal to income, Form IL-1040, Line 1
■ the deduction used to compute the federal tax credit for ■ pay you received
restoration of amounts held under claim of right under IRC • under the Voluntary Separation Incentive,
Section 1341, or • from the military as a civilian,
■ any itemized deduction taken from adjusted gross income in the • under the Ready Reserve Mobilization Income Insurance
computation of taxable income for restoration of amounts held Program,
under claim of right for the taxable year. ■ for duty as an officer in the Public Health Service
Line 16 — Contributions to a job training project For more information, see Publication 102, Illinois Filing
Enter the amount equal to the contributions you made under the Tax Requirements for Military Personnel.
Increment Allocation Redevelopment Act to a job training project. For Attach: Form W-2 showing your military pay. If you report dual
more information, see Informational Bulletin FY 90-40. status on Line 21, you must attach both Form W-2 and SF-50,
Note: Do not include your distributive share of any contributions to a Standard Form 50 (Notification of Personnel Action).
job training project from a partnership, S corporation, trust, or estate
on this line. Your distributive share of subtractions should be included Line 22 — U.S. Treasury bonds, bills, notes, savings bonds,
on Line 14 of this schedule. and U.S. agency interest
Enter the income included in your Form IL-1040, Line 1, you
Line 17 — Expenses related to federal credits or federally received from U.S. Treasury bonds, bills, notes, savings bonds,
tax-exempt income U.S. agency interest, and other similar obligations from your
Enter the amount ■ federal Form 1040 or 1040-SR, or
■ of any expenses that were disallowed as federal deductions ■ mutual fund statement plus
under IRC Section 45G(e)(3), 171(a)(2), 265, or 280C because
they are related to income that is exempt from federal tax which any income listed in Publication 101, Income Exempt from Tax, under
you added back on Form IL-1040, Line 2 or ■ “What if I have income from obligations of the United States
■ because a credit was allowed for the expenses, or included in Government?”
your adjusted gross income under IRC Section 87. ■ “What federally-taxable income is exempt from Illinois Income
Tax by other federal statutes?”
Line 18 — RESERVED
■ “What if I have distributions from money market trusts (mutual
Line 19 — Illinois Special depreciation subtraction funds)?”
Enter the subtraction amount from Form IL-4562, Step 3, Line 19.
See Form IL-4562 instructions for more information. Mutual fund distributions
Note: Do not include your distributive share of any special Include the entire amount of federally taxed distributions
depreciation subtraction from a partnership, S corporation, trust, or received from mutual funds investing exclusively in
estate on this line. Your distributive share of subtractions should be U.S. government obligations. If the mutual fund invests in U.S.
included on Line 14 of this schedule. government obligations and non-exempt obligations, your deduction
Attach: Form IL-4562. is the distribution received from the mutual fund attributable to the
U.S. government obligations, as determined by the mutual fund. If
Line 20 — Contributions made to a qualified Illinois ABLE the mutual fund does not provide this percentage amount, multiply
program the total distribution by a fraction. The numerator is the amount
Table 20 - For each row, enter the account number in Column A (do invested by the fund in exempt U.S. government obligations, and the
not enter a name or other information in this column) and amount of denominator is the fund’s total investment.
contributions made during the tax year to the qualified Illinois ABLE Note: This subtraction is the amount net of any related bond
Program in Column B. Enter one account per row. Attach a separate premium amortization.
page with any additional accounts, if needed. Add the amounts in
Column B and enter the total on Line 20a. Note: Savings bond interest that is not included in your federal
Check the box in Column C if your contribution was a gift. not an allowable subtraction.
adjusted gross income is
Attach: If you do not have the account number for a gift Note: Do not include your distributive share of a subtraction for U.S.
contribution, attach the following: government obligations from a partnership, an S corporation, a
■ Copy of the cancelled check used to make the contribution, and trust, or an estate on this line. Your distributive share of subtractions
■ Account holder’s name and address should be included on Line 14 of this schedule.
Enter the lesser amount of Line 20a or $10,000 ($20,000 if married Attach: a copy of federal Form 1040 or 1040-SR, Schedule B, if
filing a joint return) on Line 20. required federally, a copy of the statement from the mutual fund,
and any worksheets that clearly identify your interest from U.S.
obligations.
For more details, see Publication 101, Income Exempt from Tax.
Line 23 — August 1, 1969, valuation limitation
Enter 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.
Schedule M Instructions (IL-1040) (R-12/23) Page 3 of 5

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Line 24 —  River edge redevelopment zone and high impact                   Securities exempt from Illinois Income Tax include
business dividend subtraction                                            ■ Illinois Housing Development Authority bonds and notes (except 
Enter the amount from Schedule 1299-C, Step 1, Line 7.                      housing-related commercial facilities bonds and notes)
Attach: Schedule 1299-C.                                                 ■ Tri-County River Valley Development Authority bonds
                                                                         ■ Illinois Development Finance Authority bonds, notes, and other 
Line 25 — Recovery of items previously deducted on federal                  obligations (only venture fund and infrastructure bonds) 
Form 1040 or 1040-SR, Schedule A                                         ■ Quad  Cities Regional Economic Development Authority bonds 
Enter the amount of recovery of items (including refunds of any state       and notes (only those bonds declared exempt from taxation by 
and local income taxes, other than Illinois) that you deducted on your      the Authority)
federal Form 1040 or 1040-SR, Schedule A, in a prior year. You must      ■ College  savings bonds issued under the General Obligation  Bond 
have included these items on your federal Form 1040 or 1040-SR,             Act in accordance with the Baccalaureate Savings Act
Schedule 1, and your Form IL-1040, Line 1, for this tax year.            ■ Illinois Sports Facilities Authority bonds
Attach: a copy of federal Form 1040 or 1040-SR, page 1, and              ■ Higher   Education Student Assistance Act bonds 
Schedule 1, and any schedule or attachment to your federal Form          ■ Illinois Development Finance Authority bonds issued under the 
1040 or 1040-SR that shows the nature and source of this deduction.         Illinois Development Finance Authority Act, Sections 7.80 - 7.87
Line 26 — Ridesharing money and other benefits                           ■ Rural Bond Bank Act bonds and notes 
Enter the amount of ridesharing money and benefits (other than           ■ Illinois Development Finance Authority bonds issued under the 
salary) received by a driver in a ridesharing arrangement using a           Asbestos Abatement Finance Act 
motor vehicle if these amounts are included in your Form IL-1040,        ■ Quad  Cities Interstate Metropolitan Authority bonds  
Line 1.  Do not include income received from ridesharing companies.      ■ Southwestern    Illinois Development Authority bonds 
Line 27 — Payment of life insurance, endowment, or annuity               ■ Illinois Finance Authority bonds issued under the Illinois Finance 
benefits received                                                           Authority Act, Sections 820.60 and 825.55, or the Asbestos 
Enter the amount of payment of life insurance, endowment, or                Abatement Finance Act 
annuity benefits received before the time they would have ordinarily     ■ Illinois Power Agency bonds issued by the Illinois Finance  
been paid as an indemnity for a terminal illness. This amount must          Authority
be included in your Form IL-1040, Line 1.                                ■ Central  Illinois Economic Development Authority bonds 
Line 28 —  Lloyd’s plan of operation income if reported on               ■ Eastern  Illinois Economic Development Authority bonds 
your behalf on Form IL-1065                                              ■ Southeastern    Illinois Economic Development Authority bonds 
Enter the income included in your adjusted gross income from a           ■ Southern Illinois Economic Development Authority bonds
Lloyd’s plan of operation if that amount was reported on your behalf     ■ Illinois Urban Development Authority bonds 
on Form IL-1065.                                                         ■ Downstate  Illinois Sports Facilities Authority bonds 
Line 29 — Income from Illinois pre-need funeral, burial, and             ■ Western  Illinois Economic Development Authority bonds 
cemetery trusts                                                          ■ Upper Illinois River Valley Development Authority Act bonds 
Enter the amount of income earned by trust accounts established          ■ Will-Kankakee     Regional Development Authority bonds 
under the Illinois Pre-Need Cemetery Sales Act or the Illinois Funeral   ■ Export   Development Act of 1983 bonds 
or Burial Funds Act. You may claim this amount only if this income is    ■ New Harmony Bridge Authority bonds 
included on your Form IL-1040, Line 1 or Line 3.                         ■ New Harmony Bridge Bi-State Commission bonds
Line 30 — Education loan repayments for primary care physicians          For more information see Publication 101, Income Exempt from Tax.
Enter the amount of education loan repayments made for primary           Line 35 — Interest on tax-exempt obligations of non-U.S. 
care physicians who agree to practice in designated shortage areas       governments
for a specified period of time under the terms of the Family Practice    Enter the amount of interest on obligations of non-U.S. governments 
Residency Act. You may claim this amount only if this income is          included on Form IL-1040, Line 1, 2, or 3. This amount is the amount 
included on your Form IL-1040, Line 1 or Line 3.                         net of any related bond premium amortization. 
Line 31 — Reparations or other amounts received as a victim                Interest from non-U.S. government obligations is not exempt from 
of persecution by Nazi Germany                                           Illinois Income Tax except where legislation has been specifically 
Enter the amount of reparations or other amounts received as a           adopted to provide for an exemption. 
victim of persecution for racial or religious reasons by Nazi Germany      Non-U.S. securities exempt from Illinois Income Tax include
or any other Axis regime that are included in your adjusted gross        ■ Bonds    issued by the government of Guam
income. Also include any reparations or other amounts received as        ■ Bonds    issued by the government of Puerto Rico
an heir of such victim that are included in your adjusted gross income.  ■ Bonds    issued by the government of the Virgin Islands
Line 32 and 33 — Follow the instructions on the form.                    ■ Bonds    issued by the government of American Samoa
Line 34 — Interest on tax-exempt obligations of state and                ■ Bonds    issued by the government of the Northern Mariana Islands
local government                                                         ■ Mutual   mortgage insurance fund bonds
Enter the amount of interest on obligations of Illinois state and local  Line 36 — Your child’s interest reported on federal 
governments included on Form IL-1040, Line 1, 2, or 3. This amount       Form 8814
is the amount net of any related bond premium amortization.              Enter the amount of your child’s income that you reported on 
  Interest from state and local government obligations is not exempt     federal Form 8814, Parents’ Election To Report Child’s Interest and 
from Illinois Income Tax except where legislation has been               Dividends, that would be allowed as a subtraction on Lines 22, 34, or 
specifically adopted to provide for an exemption.                        35 of this schedule if you had received it rather than your child. You 
  The following is a list of securities that are exempt. However, income may claim this amount only if your child’s income is included on your 
from these obligations is not exempt if you own them indirectly          Form IL-1040, Line 1 or Line 3. 
through owning shares in a mutual fund.

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Line 37 — Railroad sick pay and railroad unemployment 
compensation
Enter the amount of any railroad sick pay and railroad unemployment 
compensation that is included in your Form IL-1040, Line 1.
Note: Do not include retirement or third party sick pay on this line. 
Attach: Form 1099-G or Form W-2 showing railroad sick pay or 
railroad unemployment compensation and a copy of page 1 of your 
federal return and Schedule 1. 
Line 38 — Unjust imprisonment compensation
Enter the amount of any compensation you were awarded by the 
Illinois Court of Claims for time unjustly served in an Illinois prison if it 
is included in your Form IL-1040, Line 1.
Line 39 — Distributions from “Bright Start,” “College Illinois,” 
and “Bright Directions” college savings plans
Enter the amount of distributions from the “Bright Start,” “College 
Illinois,” and “Bright Directions” college savings plans if you included 
them in your federal adjusted gross income because you claimed a 
federal American Opportunity Credit or Lifetime Learning Credit for the 
expenditures. 
Line 40 — Disallowed Deductions for Cannabis 
Establishments
Enter the amount of deductions disallowed federally under Section 
280E of the Internal Revenue Code for this taxable year and not 
added back under IITA Section 203.  You may claim this amount if you 
are a cannabis establishment operating in Illinois and licensed under 
the Cannabis Regulation and Tax Act or a cannabis cultivation center 
or medical cannabis dispensing organization operating in Illinois and 
licensed under the Compassionate Use of Medical Cannabis Program 
Act.
Line 41 — Add Lines 33 through 40. Enter the amount here and on 
Form IL-1040, Line 7.

Schedule M Instructions (IL-1040) (R-12/23)                                                                                                                                                                                                       Page 5 of 5

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