If the PTE Credit wasn't automatically carried over to your current return because you didn't use TurboTax last year, you would enter it in your 2025 state tax return.
If the pass-through enti...
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If the PTE Credit wasn't automatically carried over to your current return because you didn't use TurboTax last year, you would enter it in your 2025 state tax return.
If the pass-through entity is a Partnership, TurboTax will prompt you in the California interview to make any needed entries for the Partnership K-1. Under Partnership K-1 Adjustments, look for Credits and Form 3804-CR.
For taxable years beginning on or after January 1, 2021, and before January 1, 2026, California law allows an entity taxed as a partnership or an “S” corporation to annually elect to pay an elective tax at a rate of 9.3 percent based on its qualified net income (QNI). The election shall be made on an original, timely filed return and is irrevocable for the taxable year. See this California FTB webpage for more information.
Qualified taxpayers are allowed a credit equal to the qualified amount of the qualified taxpayer’s pro rata share or distributive share and guaranteed payments of the electing PTE’s qualified net income. That amount is reported on the qualified taxpayer’s Schedule K-1 (100S, 541, 565, or 568).
If the available credit exceeds the current year tax liability the unused credit may be carried over to reduce the tax for five years or until exhausted, whichever occurs first. Apply the carryover to the earliest taxable year possible. In no event can the credit be carried back and applied against a prior year’s tax.
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