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Other state PTE payments - treatment on Federal

Hello - I'm a 1040 married filer and reside in CA.  I have a K1 for a partnership that has paid PTE tax to several states the firm does business.  On my 1040, should I include the PTE level taxes paid to various states as part of my state estimated taxes (i.e., include on my Tax Payments Worksheet)? 

 

Or... am I essentially getting federal credit because the PTE deducted state income tax at the entity level already to arrive at the PTE income?  If so, is my understanding correct that this could be more favorable since there is no CAP at the PTE level for deducting state income tax, versus previously when there was no $10k SALT cap, all my state income taxes were subject to Schedule A limitations/phase-out based on income level?

 

Thank you.

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3 Replies

Other state PTE payments - treatment on Federal

I'm not sure if @Mike9241 can answer this but hopefully he will post a response.

Other state PTE payments - treatment on Federal

for federal PTE taxes are not an addback and then treated as state income taxes on schedule A. state handling varies from state to state. for example, Illinois requires the PTEs to be added back to state income and then the Illinois PTE is treated as a tax credit (not a tax payment but the effect is the same).  

I cannot speak for how other states treat PTE taxes. 

 

 

Other state PTE payments - treatment on Federal

Thanks Mike.  On the federal treatment, how are PTE taxes handled if I don't include them in Other State Taxes.  Is it inherently included as a reduction to my partnership income reported on the K1 from the PTE?

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