The Pass Through Entity Elective Tax Payment Credit is when a pass through entity (partnership or S-Corporation) elects to pay the state tax for a partner/shareholder, and deduct it as business expense at the entity level. It is an IRS approved way for partners and S-Corp owners to get around the $10,000 state and local tax deduction cap on Schedule A on personal tax return. If the program will not let you move past this, I suggest you delete your Virginia state tax return and start it again. To do so:
- Sign in and open a section of your return.
- From the menu, select State and then select Continue on the Let's get your state taxes done right screen.
- On the Status of your state returns screen, select Delete next to your state, then answer Yes.
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