I have an scorp in Minnesota. I did not pay any PTE tax this year and I have an extension on my s corp return. I am looking to elect PTE for 2022.
1. How do I know what the PTE tax amount should be? If my K1 income without PTE is 100K should I then include a state tax payment of $9,850 (MN uses .0985%) on line 12 of the 1120 (which then flows to K1 line 1)? This would then make the new K1 income as ($100,000 - $9,850).
2. Is there an upper limit of how much PTE tax I can pay? Minnesota refunds any overpayment, so this seems like a backdoor way to reduce federal tax bill. What am I missing?
Please refer to this Minnesota website regarding PTE taxes. You are correct in stating that PTE taxes are assessed at a flat rate of 9.85%. There is no upper limit.
if you are the only shareholder that's issued a K-1, a net income amount of $90,150 will appear on line 1 of your k-1. This may reduce your federal tax bill but is a legitimate expense to educe your taxable income and perfectly legal within the tax code.