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Returning Member
posted Apr 17, 2023 3:01:44 PM

PTE Tax Minnesota

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?

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2 Replies
Expert Alumni
Apr 17, 2023 4:07:52 PM

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.

 

  1. You would report the PTE tax as a state income tax paid by going to:
  2. Federal taxes>deductions>business expenses>taxes and licenses>
  3. State income Taxes

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.

Returning Member
Apr 17, 2023 6:55:45 PM

Thanks for your response.  

 

In terms of an upper limit... is there an upper limit?  Can an s corp overpay the Minnesota PTE tax?  Is there an IRS regulation limiting this or is it like all things what is reasonable?