Issue with North Carolina Taxed Pass-Through Entity Income (New for 2022)

[taxick]

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.

[pandiyattu]

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?

[ncdev]

@AliciaP1 It's getting closer to the tax deadline. Do you have an ETA when the software will be corrected?

[AnnetteB6 · Accepted solution]

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.  

@ncdev 

@taxick 

@tbrookie 

@pandiyattu 

[ace01]

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.... - 

[kd-]

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-...

However, I'm only partially confident in this approach, and if anyone could confirm that'd be great.