I have a K-1 from my LLC S Corporation that has a value for "Taxed Pass-Through Entity Income (New for 2022)" since I paid state taxes via my LLC this year. I've entered this into Turbotax for my NC K-1 for "Share of North Carolina Taxable Income, if the amount is greater than zero", but when I look at the forms that Turbotax generates, that value is not getting filled out on line 38 of D400 Sch S (Page 2).
I do see another area outside of the K-1 called "Other Business Deductions From Income" and has a field for "Taxed Pass-Through Entity Income (New for 2022)" but it says "Do NOT enter Taxed Pass-Through Entity (PTE) Income from a North Carolina partnership, S corporation or fiduciary returns here. North Carolina PTE income can be found on your NC K-1 Supplemental Schedule, line 38, Taxed Pass-Through Entity Income and should be entered in the K-1 section."
Regardless, as a test, I added the value from my K-1 into that field, and when I inspect line 38 of D400 Sch S, it has the value I entered. But I'm hesitant to leave this since Turbotax said very explicitly that I should not enter the Taxed PTE this way.
Is this an issue with Turbotax, or am I misunderstanding something?
In order to have line 38 of the NC D-400 Schedule S show that the taxed PTE income is coming from a K-1, take the following steps.
As you go through your NC return, there will be a screen that says 'Tell Us About Your State Schedules K-1'. If you have already entered some information, click Edit beside the name of your K-1. This will take you to the screen titled, 'Shareholder's Share of North Carolina Income, Adjustments, and Credits'.
On this screen, the information states that the amounts entered on lines 1 through 10 do not transfer to other parts of the return, but that amounts entered in boxes 2, 3, 7, and 8 require additional information. This is where you will enter the information about the Box 3 deductions from income (loss) related to the taxed PTE income. Enter the amount of the taxed PTE income in box 3, along with any other applicable amounts. Click Continue.
If you have entered anything in boxes 2, 3, 7, or 8, an additional screen will come up for each box so that you can give the specific details. These amounts entered in the follow-up screen will be reported in other parts of the return as needed. Entering the taxed PTE income in line 38 will transfer that amount to the K-1 column of the D-400 Schedule S worksheet, then to the D-400 Schedule S.
I am having a similar problem on the S-Corporation return itself. Line 38 of the NC-PE is blank, which I believe is what is supposed to flow through to the K-1. I was on the phone with Turbotax for over an hour and their solution was to upgrade to "Live." I think it is a problem with the software. Anyone found a solution to this problem? Thanks for your help.
I had the same experience - it seems they want me to pay to help them debug their software (though if it's something I'm just not understanding, I would be willing to pay).
It would be helpful to have a TurboTax ".tax2022" file that is experiencing this issue.
You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions:
In TurboTax Online, go to the black panel on the left side of your program and select Tax Tools.
In TurboTax CD/Download versions, go to the black panel on the top of your screen and select Online.
Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.
We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.
It would be helpful to have a TurboTax ".tax2022" file that is experiencing this issue.
You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions:
At the top menu in the black line at the top of the page go to Online.
We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.
I can't find the "Other Business Deductions From Income" that you referred to in your post. I'm using Turbo Tax Deluxe is that the same one that you are using?
@suhargett TurboTax Premium is what I'm using.
Your State Returns -> NC -> Income -> Other Business Deductions from Income -> Taxed Pass-Through Entity Income (New for 2022) Learn More
But as I mentioned, the "Learn More" says "Do NOT enter Taxed Pass-Through Entity (PTE) Income from a North Carolina partnership, S corporation or fiduciary returns here."
Upon review of your token, there is an issue with the line reporting that we have reported to our tech team to correct. However, you can enter your Taxed Pass-Through Entity Income under Other Business Deductions from Income section (and ignore the Learn More recommendation at this time) to continue filing your return and not wait for the update.
Right, thanks so much! I couldn't even find what you were talking about so now I need to know if I need an upgrade or if will I be able to use the version I already bought. I know not a question you can answer for me. (Smile) Don't want to spend an hour on the phone to find out but I guess I will have to do so!
How do I enter my Taxed Pass-Through Entity Income with the Turbo Tax Deluxe? Thanks!
I don't see Other Business Deductions from the Income section. I'm using Turbo Tax Deluxe. How do I enter North Carolina Taxed Pass-Through Entity Income (New for 2022) in Turbo Tax Deluxe?
You need to review your state taxes entries again.
To do this in TurboTax Deluxe Desktop you can follow these steps:
@AliciaP1 Thanks for the reply and the info. I'm going to wait as I'm in no rush to file my taxes. And I'd really rather not fill in a number when the software is telling me "Do NOT enter" it. Do you have an ETA when the software will be corrected?
The workaround may trigger an audit as the Form K-1 Supplemental Schedule, Line 38 is not being updated.
Alicia, thank you for your continued follow up. The problem with the solution listed below is that when I enter the Taxed Pass Through Entity Income on line 38 so that it appears on the NC-PE schedule, the software is deducting it from the S Corp's total income and thereby reducing the taxes due. This is not correct. I believe it should only be a deduction from the individual shareholders' NC income and not the S Corporation itself.
As you stated it does appear that the NC Schedule K is correct, and the individual can get their share of the taxed PTE from line 10 of the NC K-1 but the NC-PE and the related NC-K-1 Supplemental schedules are not showing the taxed pass through entity income. Do you think the software will be updated before the April 17 filing deadline for the NC 401S?
Thanks again for your help.
I do face this problem and was waiting for a final response from Turbotax. I have not seen anything yet. Did I miss any?
I don't see the taxes I pay through S-Corp entity is getting reduced from individual tax return.
I use "Turbotax Business to file "NC S-Corp return" and "Turbotax Home and Business" for filing Individual tax return. I would like to know how I can fix/work around "Pass-through entity income S-Corp" and get a new NC K1/NC-PE/NC K1 Supplemental schedule ASAP.
I need to file "NC S-Corp return" first and then the individual return.
Appreciate your inputs/solutions.
When is the update expected?
@AliciaP1 It's getting closer to the tax deadline. Do you have an ETA when the software will be corrected?
In order to have line 38 of the NC D-400 Schedule S show that the taxed PTE income is coming from a K-1, take the following steps.
As you go through your NC return, there will be a screen that says 'Tell Us About Your State Schedules K-1'. If you have already entered some information, click Edit beside the name of your K-1. This will take you to the screen titled, 'Shareholder's Share of North Carolina Income, Adjustments, and Credits'.
On this screen, the information states that the amounts entered on lines 1 through 10 do not transfer to other parts of the return, but that amounts entered in boxes 2, 3, 7, and 8 require additional information. This is where you will enter the information about the Box 3 deductions from income (loss) related to the taxed PTE income. Enter the amount of the taxed PTE income in box 3, along with any other applicable amounts. Click Continue.
If you have entered anything in boxes 2, 3, 7, or 8, an additional screen will come up for each box so that you can give the specific details. These amounts entered in the follow-up screen will be reported in other parts of the return as needed. Entering the taxed PTE income in line 38 will transfer that amount to the K-1 column of the D-400 Schedule S worksheet, then to the D-400 Schedule S.
I need help trying to understand several of the questions.
Is the Partnership a Taxed Partnership? - we don't pay taxes upfront - we pay individually - pass through basically.
A. All Partners
1. Share of Partnership Income (loss). - is this Percentage or an amount that was entered from Line 1 of K-1
2. Additions to Income (where do I pull this from)
3. Deductions from Income (loss) - where do I pull this from
4. Share of tax credits: - % or an amount and where do I pull it from
5. Share of tax withheld from Commission paid.... -
In 2025, with TurboTax 2024, this is still not working - I believe I found a more correct workaround here: https://ttlc.intuit.com/community/state-taxes/discussion/re-turbotax-schedule-k1-for-north-carolina-for-taxed-pte-still-incorrect/01/3639401/highlight/true#M179347
However, I'm only partially confident in this approach, and if anyone could confirm that'd be great.