North Carolina S corp PTET issue in TurboTax

[PTGeek]

Hey all. Hope for some help here. 

My S-corp, located in NC, paid quarterly state taxes using the CD-429 on behalf of my one and only employee (myself). I have had the same issue for years, and this appears to be a TurboTax blind spot, where there is no obvious place to account for these payments and how they flow through to my personal tax return as taxes already paid. Chat GPT made several suggestions regarding how to make this work, but none are accurate. I can even see on the NC K-1 D 401-S Part 4 line 11 "state tax withheld" where that number ($506) could be entered, but TurboTax will not allow an entry on that line. There is no place on the NC D-400TC where I could logically enter the taxes paid by the s-corp. I wish TurboTax would fix this issue once and for all. TIA.  

[PatriciaV]

Due to the complexity of options available for reporting the activity of an S-Corp in North Carolina, it would be helpful to have a TurboTax ".tax2025" 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: 

1. Open your return and go to Online in the top menu, then choose "Send Tax File to Agent." On a Mac computer, choose Share or Help >> Send to Agent.
2. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
3. Reply to this thread with a screenshot of your Token number (this avoids Community filters for numbers with a dash) and tag (@) the Expert requesting the token from you.

We will attempt to determine the cause of your experience and possibly provide you with a resolution.

[PTGeek]

@PatriciaV 

[PatriciaV]

Thank you for the token.  We are looking into the issue and will respond as soon as we have information to share.

[PatriciaV]

We have reviewed the information on your North Carolina individual tax return. You can report the tax paid by the S-Corp in TurboTax as follows:

1. Log into TurboTax and open your return.
2. In TurboTax Online, use this link to go to Schedule K-1 (1120S). Or use the search box to find this section in TurboTax Desktop.
3. Edit the Schedule K-1 and continue to the screen with the checkboxes.
4. Check Box 12 and choose Code ZZ. No amount is needed in the box for this code.
5. Continue to the next page and enter the amount of "State Income Tax Withheld" and choose "North Carolina" from the State Name drop-down. No other entries needed.
6. Continue to back to the K-1 Summary page.

The withholding will appear on NC S K-1 D-4015 Part 4 Line 11 and on Form D-400 p1,2 Line 21(d), increasing the tax paid and any refund due from North Carolina.

[edited Step 4 | 4/2/2026 | 9:04 PDT]

[PTGeek]

@PatriciaV 

Problem 1- There is no "box 20" on the K-1 1120S.

there is a box 17 - "other information" option

Can you send me a screenshot of where I would enter the ZZ election? 

Problem 2- from there the instructions to follow to the next page to enter the amount of "State Income Tax Withheld" and choose "North Carolina" from the State Name drop-down menu is unclear because of the issue wtih step 1. 

[RobertB4444]

Clearly that is a typo - the box is 17 for an 1120S K1 and 20 for a 1065 K1.  The place to enter the information about line 17 code ZZ is here -

and then once you have entered the information there you continue to the next screen which allows you to enter any other information associated with the box 17 code ZZ amount.

[PTGeek]

@RobertB4444 

Thanks for the corrected info. Do I also need to flow that through onto my NC tax return form D400 under "Other tax Payments" Line 21D "S corp"? Otherwise I can not seem to get the amount paid by my scorp to flow anywhere to reduce my NC taxes due 

[PTGeek]

@RobertB4444 

@PatriciaV 

Hoping either of you would respond to my last follow up questions. 

I feel like I am 90% there but not all the way 🙂

TIA

ERIN 

[PatriciaV]

Apologies for the typo in the previous response. Step 4 should read, "Check Box 12 and choose Code ZZ."
Box 12 presents the drop-down for the state withholding. The remaining instructions are correct.

No further entries should be needed for this tax payment on your state return.

The previous post has been revised.

@PTGeek 

[PTGeek]

I have followed the above steps, but the payment "credit" is still not reflected on my personal tax return and decreasing my tax owed. 

@PatriciaV 

This is a major TurboTax blind spot and has been for years. 

[PatriciaV]

In the diagnostic copy of your return provided previously, entering the PTET on the federal K-1 Box 12 Code ZZ and choosing North Carolina from the state drop down automatically reported the withholding on NC S K-1 D-401S Part 4 Line 11. This amount flows through to Form D-400 Line 21(d) for the S-Corp. No manual entries were needed on the state return.

If the amount doesn't appear on NC K-1 Line 11, check the federal K1S Additional Info worksheet for Box 12 to confirm the state and amount were recorded properly.

[PTGeek]

@PatriciaV 

Ok. I got it on line 12 instead of 17 code ZZ, which was previously recommended. 

I assigned the drop-down to NC and it is showing on my NC K-1 line 11, but it is NOT automatically flowing through to Form D-400 Line 21(d) for the S-Corp. 

I can override that cell, but it seems like it is giving me "double" credit for the $506 paid. 

[PatriciaV]

Open Form D-400 p1,2 in Forms Mode. Scroll down to Line 21(d) and right click the Taxpayer line. Choose "Data Source." You should see that this amount comes from the federal K-1 Box 12 Line 3, if state is "NC" or blank and NC is the resident state. This number is actually shown on the federal K1S Addl Info 1 worksheet under Box 12.

You can try overriding this line and manually entering the amount from Box 12. Since Line 21(d) is actually a total of the two lines, you may still be able to e-file your return.

We're not able to duplicate the experience you see, but we have confirmed the flow-through works in your diagnostic copy.