Schedule INS (IL-1120)

This article provides a line-by-line instructions for completing Illinois Schedule INS (IL-1120) for foreign insurers.

Illinois Schedule INS (IL-1120), formally titled “Tax for Foreign Insurers” and designated as IL Attachment No. 7, is a mandatory attachment to Form IL-1120 used exclusively by foreign insurance companies to calculate a potential reduction in Illinois replacement tax and income tax when the tax imposed by their state or country of domicile exceeds Illinois liabilities, based on pro forma computations using base income before apportionment and net income after apportionment, limited by 1.75% of net premiums taxable under Section 409 of the Illinois Insurance Code minus specific deducted taxes, ensuring foreign insurers avoid double taxation while complying with Illinois revenue rules for tax years ending on or after December 31, 2019, including detailed support for domicile tax forms and precise transfers to Form IL-1120 Lines 51 and 54.

How to File Schedule INS

Attach completed Schedule INS to Form IL-1120. File with main return electronically at Tax.Illinois.gov or by mail. Complete Steps 1-7 of Form IL-1120 first. Use whole dollars. If domicile imposes no income tax on insurers, check box on Line 4 and enter zero.

How to Complete Schedule INS

How to Complete Schedule INS

Header

  • Name: Enter name as shown on Form IL-1120.
  • FEIN: Enter federal employer identification number.
  • Year Ending: Enter month/year.

Step 1: Figure the Tax Imposed by Your State or Country of Domicile

  • Line 1: Enter state or country of domicile.
  • Line 2: Enter base income from Form IL-1120 Line 23.
  • Line 3: Enter net income from Form IL-1120 Line 39.
  • Line 4: Compute pro forma tax by domicile using Line 2 (base) and Line 3 (net). If no income tax on insurers, check box and enter zero. Attach all supporting domicile forms.

Step 2: Figure Your Income Tax Reduction Limit

  • Line 5: Enter net premiums taxable under Section 409 Illinois Insurance Code included in Form IL-1120 Step 4 Line 29.
  • Line 6: Multiply Line 5 by 1.75% (.0175) for total tax reduction limit.
  • Line 7a: Enter privilege tax under Section 409 (exclude retaliatory tax) deducted in federal taxable income.
  • Line 7b: Enter fire insurance company tax under Section 12 Fire Investigation Act deducted in federal.
  • Line 7c: Enter fire department tax under Section 11-10-1 Illinois Municipal Code deducted in federal.
  • Line 8: Add Lines 7a-7c.
  • Line 9: Subtract Line 8 from Line 6 (zero if negative). This is 1.75% income tax reduction limit. Enter on Line 14.

Step 3: Figure Your Tax

  • Line 10: Enter replacement tax from Form IL-1120 Line 44.
  • Line 11: Enter income tax from Form IL-1120 Line 49.
  • Line 12: Add Lines 10-11 for tentative tax.
  • Line 13: Enter pro forma tax from Line 4.
  • Line 14: Enter 1.75% reduction limit from Line 9.
  • Line 15: Enter greater of Line 13 or Line 14. If greater than Line 12, no reduction; do not use schedule.
  • Line 16: Enter lesser of Line 10 or Line 15.
  • Line 17: Subtract Line 16 from Line 10. This is replacement tax reduction. Enter on Form IL-1120 Line 51.
  • Line 18: If Line 15 > Line 16, subtract Line 16 from Line 15; else zero. This is maximum net income tax after credits.
  • Line 19: Enter lesser of Line 11 or Line 18.
  • Line 20: Subtract Line 19 from Line 11. This is income tax reduction. Enter on Form IL-1120 Line 54.
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