The Illinois Income Tax Act exempts IMRF disability payments from Illinois income tax.
If the disability payments are included in federal adjusted gross income, the disability payments are also included on Illinois IL-1040. In order to claim the exemption on the Illinois Income Tax Return, IL-1040, it is necessary to follow the specific instructions provided with the IL-1040 concerning subtractions to arrive at Illinois taxable income.
If the disability payments are not included in federal adjusted gross income, the disability payments are not included on Illinois IL-1040. In that case, the disabled member should not claim an exemption on Illinois IL-1040.