Schedule CR

This article explains what Schedule CR is, why it matters, and provides clear, step-by-step line-by-line instructions to help Illinois taxpayers accurately claim credit for income taxes paid to other states.

Schedule CR, officially known as “Credit for Tax Paid to Other States”, is a tax form issued by the Illinois Department of Revenue. It allows Illinois residents and part-year residents to claim a credit for income taxes they paid to another U.S. state, the District of Columbia, Puerto Rico, or a U.S. territory.

You must file this schedule if you lived in Illinois during all or part of the year, earned income in another state, paid income tax to that state, and included that income in your Illinois base income. This prevents you from being taxed twice on the same earnings. However, if you were a nonresident of Illinois for the entire year or you didn’t pay tax to both Illinois and another state, you shouldn’t file this form.

Importantly, this credit doesn’t apply to income earned in Iowa, Kentucky, Michigan, or Wisconsin, if it’s from wages — because Illinois has reciprocal agreements with these states. For all others, Schedule CR ensures fair taxation and prevents double-taxing of multi-state income sources.

How To File Schedule CR

  • Attach Schedule CR to your Form IL-1040 (or Amended Form IL-1040-X if you are correcting a previous filing).
  • Gather your federal return (Form 1040 or 1040-SR) and your out-of-state tax return(s).
  • Complete all six steps carefully and in order.
  • Include only whole dollar amounts and use your federal adjusted gross income (AGI) as a starting point.

Now, let’s go through it step-by-step.

How To Complete Schedule CR

How To Complete Schedule CR

Step 1: Provide The Following Information

(Top of Page 1)

  • Enter your name exactly as shown on your Form IL-1040.
  • Enter your Social Security Number (SSN).
  • Check the box if you are attaching this form to an Amended Illinois Tax Return (Form IL-1040-X).

Step 2: Figure The Illinois And Non-Illinois Portions Of Your Federal Adjusted Gross Income

Columns:

  • Column A – Total amounts from your federal return (or Schedule NR for part-year residents).
  • Column B – Portion earned outside Illinois.

Lines 1–16:

  1. Wages, salaries, tips (from federal Form 1040, Line 1z).
  2. Taxable interest (Line 2b).
  3. Ordinary dividends (Line 3b).
  4. State or local income tax refunds (Schedule 1, Line 1).
  5. Alimony received (Schedule 1, Line 2a).
  6. Business income or loss (Schedule 1, Line 3).
  7. Capital gains or losses (Form 1040, Line 7).
  8. Other gains or losses (Schedule 1, Line 4).
  9. Taxable IRA distributions (Form 1040, Line 4b).
  10. Pensions and annuities (Form 1040, Line 5b).
  11. Rental real estate, royalties, partnerships, S corporations, trusts (Schedule 1, Line 5).
  12. Farm income or loss (Schedule 1, Line 6).
  13. Unemployment compensation (Schedule 1, Line 7).
  14. Taxable Social Security benefits (Form 1040, Line 6b).
  15. Other income (Schedule 1, Line 9). Identify each item.
  16. Add Lines 1 through 15 for each column.

Enter the totals on Line 16.

Step 2 (Continued): Adjustments To Income

(Page 2)

Lines 17–33:
17. Bring forward totals from Line 16.
18. Educator expenses (Schedule 1, Line 11).
19. Certain business expenses (Schedule 1, Line 12).
20. Health Savings Account deduction (Schedule 1, Line 13).
21. Moving expenses (for military only, Schedule 1, Line 14).
22. Deductible part of self-employment tax (Schedule 1, Line 15).
23. Self-employed SEP, SIMPLE, and qualified plans (Schedule 1, Line 16).
24. Self-employed health insurance deduction (Schedule 1, Line 17).
25. Penalty on early withdrawal of savings (Schedule 1, Line 18).
26. Alimony paid (Schedule 1, Line 19a).
27. IRA deduction (Schedule 1, Line 20).
28. Student loan interest deduction (Schedule 1, Line 21).
29. RESERVED — skip this line (no entry).
30. Archer MSA deduction (Schedule 1, Line 23).
31. Other adjustments (see federal instructions).
32. Add Lines 18 through 31 for both columns.
33. Subtract Line 32 from Line 17 in each column — this gives your adjusted income.

Step 3: Figure Your Illinois Additions And Subtractions

Lines 34–41:
34. Federally tax-exempt interest and dividends (Form IL-1040, Line 2).
35. Other additions (Form IL-1040, Line 3).
36. Add Lines 33, 34, and 35.
37. Federally taxed Social Security and retirement income (Form IL-1040, Line 5).
38. Illinois income tax overpayment included on your federal return (Form IL-1040, Line 6).
39. Other subtractions (Form IL-1040, Line 7).
40. Add Lines 37–39.
41. Subtract Line 40 from Line 36. If Line 40 is larger, enter zero.

Step 4: Figure Your Schedule CR Decimal

Lines 42–43:
42. Enter the Line 41 totals (Columns A and B).
43. Divide Column B, Line 42 by Column A, Line 42 and round to three decimal places.

  • If Column B is larger, enter 1.000.
  • This decimal determines the proportion of your income taxed by another state.
  • You’ll use it again in Step 6.

Step 5: Part-Year Residents Only

(Full-year residents skip to Step 6.)

Lines 44–49:
44. Enter your base income from Form IL-1040, Line 9.
45. Divide Column A, Line 42 by Line 44 (round to 3 decimals).
46. Enter your exemption amount from Form IL-1040, Line 10.
47. Multiply Line 45 by Line 46.
48. Subtract Line 47 from Column A, Line 42.
49. Multiply Line 48 by 4.95% (.0495). Enter this on Line 52 in Step 6.

Step 6: Figure Your Credit

Lines 50–55:
50. If claiming credit for taxes paid to Iowa, Kentucky, Michigan, or Wisconsin, check the box for that state.
51. Enter total income tax paid to other states on income included in your Illinois base income.

  • Include only actual tax paid, not withholding.
  • You may include local or city taxes if filed with the entity.
  1. Illinois Residents: Enter your Illinois tax due from Form IL-1040, Line 12.
    Part-Year Residents: Use the amount from Step 5, Line 49.
  2. Enter the decimal amount from Step 4, Line 43.
  3. Multiply Line 52 by Line 53.
  4. Compare Lines 51 and 54 — enter the lesser amount here and on Form IL-1040, Line 15.
    This is your tax credit for taxes paid to other states.

Filing And Documentation Tips

  • Always attach Schedule CR to your Illinois tax return.
  • Keep copies of all out-of-state tax returns and Schedules K-1-P or K-1-T.
  • Only report taxes you actually paid to another state or local government.
  • Use whole dollar amounts and round decimals to three places.
  • If Illinois requests, you must provide supporting out-of-state returns.
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