Dear Expert:
I am asking the question regarding where to input the PTET as a deduction item in 1120S when using Turbo Tax Business version. (Or did I misunderstand something here).
Here is the background: I am a California based S-Corp. I am using the TurboTax Business desktop version. 2023 is the first tax year I am electing for PTET. I have paid the initial $1000 during year 2023. Now I am preparing the business tax return by using TurboTax Business.
I have read the community articles regarding the PTET topic. I have learned how to go through Form 3804.
I am using the accrual method. So my understanding is that I may deduct the PTET payment (due 03/15/2024) as a deduction for year 2023. My question is where to input this PTET payment as a deduction item on 1120S.
Let us say I have business income 1000 for year 2023. Expense is X excluding the (tax and license) items. State Income Tax had been calculated as Y. PTET had been calculated as Z.
In TurboTax Business--> Federal Taxes-->Deductions --> Business Expenses --> Taxes and licenses:
I input the State Income Tax as Y. (This is the TurboTax calculated result from State Tax part)
I input the Other Taxes as Z. (PTET amount, This is the turbo Tax calculated result from State Tax part)
I can see that on the federal side, my income is being calculated as (1000-X-Y-Z), which is reflected in the K-1 as well, the income is showing as (1000-X-Y-Z) on the K-1.
However when I look into the calculation of the state income tax on the 100S, I can see that the state income was inheriting from the federal income of (1000-X-Y-Z) and then by adjusting back to the recognized state income tax. I can see that on the resulted 100S, the state was recognized as (1000-X-Z).
This seemed to be something wrong, since I believe that the state recognized income should be (1000-X), i.e. both the PTET and State income tax should be adjusted back.
So again my immediate question is where to input the PTET on the federal tax deduction part? Or should it be input on the federal tax deduction part?
Did I misunderstand something here? Your advice will be most appreciated.
Thanks.
Andrew
