PTET (Pass-Through Entity Tax)

[info14]

I know that TurboTax is working on finalizing all of the state forms and such but is there currently a place in Turbotax home and business 2021 (windows desktop versions) to mark on my personal return the taxes my s corp paid to ny through the PTET program.  (I purchased and use turbotax business to file those taxes and get my k-1).

My understanding is that the ptet is considered a business expense (taxes) that reduces federal net income, but NY requires inputting the PTET number as an adjustment to the federal net income number so that state taxes can be properly counted.  Essentially the federal and state income numbers will not be the same.  This way the amount of the state tax is not taxed on the federal level.

Also to confirm, my s corp pays me a reasonable salary but it is my understanding that the PTET calculation is based on the business income after wages have been paid because state taxes on these wages have already been deducted by the s corp as a business expense.

https://www.berdonllp.com/the-nys-pass-through-entity-tax-pay-this-tax-to-pay-less-tax/

[DianeW777]

The PTET is a credit used to reduce tax on the New York (NY) state return. This PTET credit is recorded on Form IT-653 and is not yet available in TurboTax.  It is scheduled for availability on January 13, 2022.  

Eligible credit claimants that receive a PTET credit from an electing entity may claim the credit on their personal income tax returns. If the eligible credit claimant is a trust, other than a trust that is disregarded for tax purposes, it is allowed a PTET credit on the trust’s personal income tax return, but it is not permitted to distribute any PTET credit it receives to its beneficiaries.

The IT-201 is not yet available however you can view the PTET Form IT-653 - this credit is carried to line 12 of the NY IT-201.

NY has a page to show how the calculation is to be completed here.

[info14]

Here is the step by step guide - this answer was noted for another TurboTax product but I am copying below.  In my case (S Corp, one owner) I would do the steps for the 1040 and the 1165-S (the 1165 for NY does not yet have this functionality and they say it will be ready in another few days).

https://proconnect.intuit.com/community/credit/help/how-to-enter-new-york-pte-tax-in-proseries/00/19...

To claim the credit on a 1040:

1. Select the Forms menu, then click Open Form.
2. Type in 653 to highlight form IT-653 on the list. Press OK.
3. Enter the entity name, EIN, and PTET credit amount for each K-1.

The PTE credit will flow to form IT-201, line 71, as a refundable credit. The program will automatically add-back the credit amount on form IT-225, code 219.

To indicate PTE was paid on a 1065:

1. Open the Sch K-1 Summary.
2. Scroll down to item Q, "Did the partnership elect to pay the pass-through entity tax?"
3. Check Yes.
4. Check the Resident or Nonresident box.

You may want to include the amount of PTE paid on this partner's behalf under Supplemental Information, since it's not reported elsewhere on the NY K-1.

To indicate PTE was paid on an 1120-S:

1. Open the CT-34-SH, p1-3.
2. Scroll to the S Corporation Amounts for Shareholders Smart Worksheet at the bottom of the form.
3. Enter the total Pass-through entity taxable income for all shareholders.
4. Enter the total PTET credit to be claimed for all shareholders.

The shareholder's portion of PTET taxable income and credit will transfer to their Schedule K-1 Equivalent as supplemental information.

[SS46T]

This is helpful for understanding the process. Is it only available in Pro-Series? I am using Turbotax Business for my single member S.Corp (I am 100% owner). And using TurboTax Premier for my Individual return (1040)

Thanks,

[info14]

Yes it should work using the View - Forms menu option to open these forms in TT Business and TT Premier

[ldeanhallig]

It is available now on the NYS return under  Other Less Common Credits. That will bring you to the respective forms page, it is located 2nd from the bottom. "Claim for Pass-Through Entity Tax Credit (IT-653)". 

[jsl1998_99]

I am using TurboTax online self-employed. I see how the IT-653 adjusts the NYS tax due but the completion of the form did not adjust the federal tax due and I don't see anywhere to enter the PTE tax paid on my behalf on the Federal form.

[deg2103]

Same issue. When I enter the PTET tax credit on my New York return it is not reducing my federal income tax due. Any suggestions?  

[jsl1998_99]

I checked with my firm's accountant and the answer in my case is that the amount of the PTET has already been taken into account in the amount of income reported on my K-1, so there is no further adjustment to be made on my Federal return- only the amount of your NYS tax is affected by the completion of the IT-653 NYS form.

[Jonf10]

Hi

I found that when I used the form 653, it included the amount on Form IT 225 described as A 201 instead of A 219??

Thoughts?

Jonathan

[vtaxnyc]

any luck figuring this out? 

PTET paid amounts shouldn't go in the deductions -  business expense - taxes and licenses and state taxes paid?

Very confused on how this shows up on the k1, unless it doesn't and shows up somewhere else? 

[JosephS1]

Perhaps this can help if you have yet to try it. 

To claim the credit on a 1040:

Select the Forms menu, then click Open Form.

Type in 653 to highlight form IT-653 on the list. Press OK.

Enter the entity name, EIN, and PTET credit amount for each K-1.

The PTE credit will flow to form IT-201, line 71, as a refundable credit. The program will automatically add-back the credit amount on form IT-225, code 219.

To indicate PTE was paid on a 1065:

Open the Sch K-1 Summary.

Scroll down to item Q, "Did the partnership elect to pay the pass-through entity tax?"

Check Yes.

Check the Resident or Nonresident box.

You may want to include the amount of PTE paid on this partner's behalf under Supplemental Information, since it's not reported elsewhere on the NY K-1.

To indicate PTE was paid on an 1120-S:

Open the CT-34-SH, p1-3.

Scroll to the S Corporation Amounts for Shareholders Smart Worksheet at the bottom of the form.

Enter the total Pass-through entity taxable income for all shareholders.

Enter the total PTET credit to be claimed for all shareholders.

The shareholder's portion of PTET taxable income and credit will transfer to their Schedule K-1 Equivalent as supplemental information.

@vtaxnyc 

[vtaxnyc]

@JosephS1 

Thanks for your reply - however when I open that form ct-34-sh, p1-3 and scroll down to the worksheet - there is no area for me to put in the income. Let me attach a screen shot

[JimSilver]

Where do we find the K-1 Summary in order to make this selection on line Q?

[PatriciaV]

If you are using TurboTax for Desktop, you can open the Sch K-1 Summary worksheet using Forms Mode. 

However, you should also be able to enter the PTET credit within the State taxes interview. The topic varies by state, but most have a section for Other/Uncommon Credits. Look for a question about pass-through entity tax paid on your behalf. Check the box and/or enter the amount from your state K-1.

@JimSilver