A federal individual tax return with Forms 1099-INT and/or 1099-DIV entered in Schedule B (Form 1040) may not require Schedule B due to the total of interest and dividends being less than $1,500 each.
If the return includes the resident Illinois individual tax return with greater than $1,500 of tax-exempt federal obligations entered as a subtraction on Schedule M (sourced from, for example, U.S. Treasury bonds, bills, notes, savings bonds, and U.S. agency interest), the Illinois return will reject when electronically filed with code ILM-2900-1:
Reject Code: ILM-2900-1 | Category: Data Mismatch | Severity: Error
SchILM Step 3 Line 22 USObligations must be supported by transmitting the U.S. Schedule B with the electronic return if SchILM Step 3 Line 22 USObligations is greater than $1,500.
If the federal return includes more than $1,500 of tax-exempt federal obligations subtracted on Illinois Schedule M, the state requires a copy of the federal Schedule B, even if the federal return does not require it.
A return that receives the above reject will need to be mailed to the state of Illinois with information attached showing the taxpayer's interest in U.S. obligations, such as a copy of federal Schedule B, or if sourced from a mutual fund a copy of its statement.
Additional Information: