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1120 states

Enter pass-through entity tax (PTET) for an 1120 return

Overview

Federal 1040 Schedule A limits the itemized deduction for state income taxes paid to $10,000. However, some states let S corporations pay state taxes on behalf of a shareholder. The S corporation can then take an itemized deduction on Form 1120 for state income taxes paid that's not subject to the $10,000 limit. As a result, the amount of federal income that passes through from the entity reflects an itemized deduction for the entire amount of state taxes paid. The overall taxable income that the individual taxpayer reports on Form 1040 is then less than if the S corporation had not paid taxes on behalf of the Individual.
States that allow these pass-through entity tax (PTET) credits provide a means to calculate a tax at the S Corporation level using:
  • a separate tax form (similar to a composite return), or
  • Fields within the main return designed to calculate a tax.
The state's K-1 (or equivalent) will include reporting information required to prepare the shareholder's tax return.

State-specific entry

To add Form EPT to the Alabama return, go to
File
 then
Client Properties
. Select
EPT Pass-Through Entity Tax
 on the Alabama tab.
Form EPT is a separately filed return, and you can e-file it.
To elect PTET, go to the AZGenS screen and select
Elect to pay Pass-through entity tax (S corp)
. Tax is calculated on Form 120S, Page 3, Part 2, Line 47 and Line 51.
You can review filing instructions on the AZ website.
To add Form 1100PET to the Arkansas return, go to the ARGenS screen and select
Elect to pay tax at the entity level (Form 1100PET)
. In addition to Form 1100PET, there are also Form AR 362 for the election and Form AR 1155-PET for the extension.
You can e-file the PTET forms.
You can review filing instructions and FAQs on the AR website.
To add Form 3804 to the California return, go to
View
 then
Shareholder Information
. Select
Electing pass-through entity tax
 for each applicable shareholder.
To elect PTET, go to the COGenS screen and select
Elect to file and pay Pass-through entity tax
. Tax is calculated on Form DR 0106, Page 2, Part 3, Line 20.
To elect PTET, go to the GAGenS screen and select
S Corporation elects to pay the tax at the entity level (S corp)
. Visit 560-7-3-.03 Election to Pay Tax at the Pass-Through Entity level for more information on the pass-through entity tax calculation and filing requirements.
To elect PTET, go to the HIGenS screen and select
Elect to pay tax at the entity level
. Tax is calculated on Schedule PTE, Pass-through Entity Tax Calculation and Schedule PTE-U, Upper-Tier Pass-Through Entity Tax Credit Allocation (if applicable). These schedules will be part of the e-file. Visit https://files.hawaii.gov/tax/legal/tir/tir23-01.pdf and https://files.hawaii.gov/tax/legal/tir/tir23-03.pdf for more information on the pass-through entity tax calculation and filing requirements.
To elect to be an affected business entity, go to the IDGen screen and select
Elect to be affected business entity
. Tax is calculated on Form 41S, Page 2, Line 44.
To elect PTET, go to the ILGen screen and select
Elect to pay Pass-through entity tax
. PTE Income calculates on the IL Pass-Through Entity Tax Income Worksheet.  The Income is on Form IL-1120-ST, Page 3, Line 60.  The Pass-Through Entity Tax is on Form IL-1120-ST, Page 3, Line 61.
Additional Information can be found here:  https://www2.illinois.gov/rev/questionsandanswers/Pages/689.aspx
To elect PTET, go to the INGen screen and select
Elect to file and pay Pass-through entity tax
. The tax is calculated on Schedule IN-PTET.
To elect PTET, go to the IAGen screen and select
Elect to file and pay Pass-through entity tax
. The tax is calculated on IA 1120S, Page 4, Part 6. Visit https://tax.iowa.gov/idr-releases-updated-tax-guidance-pass-through-entity-tax for more information
To elect PTET, go to the KSGenS screen and select
Elect to pay tax at the entity level
. Tax is calculated on Form K-120S, Page 2, Line 31. Visit https://www.ksrevenue.gov/pdf/k-120s22.pdf for more information
To add Form 740-PTET to the Kentucky return, go to
File
 then
Client Properties
. Select
740-PTET Pass-Through Entity Tax
 on the Kentucky tab.
Once added, go to the KYPTE screen and select
Elect to file and pay Pass-through entity tax
.
The following forms are available.
  • Form 740-PTET, Kentucky Pass-Through Entity Tax
  • Form KPTET-V, Kentucky Pass Through Entity Tax Payment Voucher
  • Form PTET-CR, Kentucky Pass-Through Entity Tax on Distributive Share Income
  • Form 740-PTET-ES, Pass Through Entity Tax Estimated Voucher
  • Form 740-PTET-EXT, Extension of Time to File Kentucky Form 740-PTET
  • KY PTET Financial Transaction Record
  • KY PTET Late Filing Interest and Penalty Worksheet
Form 740-PTET is a separately filed return, and you can e-file it.
To add Form 511, Pass-Through Entity Election Income Tax Return, to the Maryland return, go to the General folder of an S-Corp return and mark the
Elect to pay tax at the entity level (Form 511)
 checkbox. 
To add Form 69D-ELT to the Massachusetts return, go to
File
 then
Client Properties
. Select
63D-ELT Entity Level Tax
 on the Massachusetts tab.
Once added, go to the MAELT screen and select
Pass-through entity has elected to pay at the entity level
.
Tax is 5% of qualified income. Qualified members still need to file their normal individual return or be part of a composite return, but will get a credit for 90% of their allocated Entity Level Tax.
The Entity level tax return is a stand alone return with its own separate extension and estimates.  You're required to e-file the return and extension and pay electronically, either using Electronic Funds Transfer (EFT) on the state's MassTaxConnect website or using Electronic Funds Withdrawal (EFW) in UltraTax CS.
You can find filing instructions and FAQs on Massachusetts website.
  • Enter the flow-through entity tax credit on the MICrS screen in
    Flow-through entity tax credit
    . The shareholder’s share of the amount you enter in this field calculates on the MI Shareholder’s Share of Income and Modifications Worksheet and on Form 807, Page 3, Column 4 Allocated Share of Flow-Through Entity Tax Credit if applicable.
  • Enter the State amount of the taxes in
    Taxes on or measured by net income
     on the MICrS screen. The shareholder’s share of the amount you enter in this field calculates on the MI Shareholder’s Share of Income and Modifications Worksheet.
To elect PTET, go to the MNGenS screen and select
Pass-through Entity (PTE) Tax
. Tax is calculated on Schedule PTE and reported/paid/filed with Form M8. Visit https://www.revenue.state.mn.us/pass-through-entity-pte-tax for more information
To elect PTET, go to the MSGen screen and select
Election to pay tax on behalf of all shareholders (S.A.L.T. response)
. Tax is calculated on Form 84-105, Page 1, Line 6.
Visit Updated EPTE FAQ for more information.
To add Form MO-PTE to the Missouri return, go to
File
 then
Client Properties
. Select
MO-PTE Pass-through Entity Tax
 on the Missouri tab.
Once added, go to the MOPTE screen and select
Elect to file and pay Pass-through entity tax
.
To elect PTET, go to the MTGenS screen and select
Elect to file and pay Pass-through entity tax
. Income and tax are calculated on Form PTE, Page 2, Line 24 and Line 25. You can find FAQs and Instructions on Montana's website.
To elect PTET, go to the NEGenS screen and select
S Corporation elects to pay tax at the entity level
. Income and tax are calculated on Nebraska Schedule PTET. For more information, visit https://revenue.nebraska.gov/about/frequently-asked-questions/pass-through-entity-tax-faqs.
To elect PTE tax, New Jersey requires an annual election to be made on-line at NJ Pass-Through Business Alternative Income Tax (PTE) Login (state.nj.us).
After the annual election has been made, go to Client properties and select PTE-100 Pass through Entity Tax on the New Jersey tab.
Next, visit Screen NJPTEGen and mark the Entity has timely filed the on-line election to file Form PTE-100 for current tax year field.
The tax is calculated on Form PTE-100, Page 1, Line 2.
For New Jersey, Form PTE-100 is a separate return, and can be e-filed separately, as well as its extension (PTE-200T) and Estimates (PTE-150).
To elect PTET, go to the NMGenS screen and select
Electing entity-level tax
. Tax is calculated on Form S-Corp-1, Line 27. For more information, visit New Mexico's website.
The tax should be filed online through NY Web File. To add it to the return, go to
File
 then
Client Properties
. Select
Pass-through Entity Tax
 on the New York tab.
UltraTax CS calculates the PTE Taxable Income on the PTE Computation of PTE Taxable Income Worksheet.
Additional information on the filing of this return can be found here: https://www.tax.ny.gov/bus/ptet/
The tax should be filed online through NY Web File. To add it to the return, go to
File
 then
Client Properties
. Select
Pass-through Entity Tax
 on the New York tab.
UltraTax CS calculates the NYC PTE taxable Income and PTET tax on the Computation of PTE Taxable Income Worksheet.
Additional information on the filing of this return can be found here: https://www.tax.ny.gov/bus/ptet/
To elect PTET, go to the NCGen screen and select
Elect to file and pay as a Taxed S Corporation
. Tax is calculated on Form CD-401S, Page 2 Line 19.
To add Form IT 4738 to the Ohio return, go to
File
 then
Client Properties
. Select
IT 4738 Pass-through Entity Tax
 on the Ohio tab. Tax is calculated on Form IT 4738, Electing Pass-Through Entity Income Tax Return, which is a separate return you can e-file. You can find more information on Ohio's website.
To add Form OR-21 to the Oregon return, go to
File
 then
Client Properties
. Select
OR-21 Pass-through Entity Tax
 on the Oregon tab.
Once added, go to the ORPTEGen screen and select an option in
Elect or revoke election to file and pay pass-through entity tax
.
The following forms are available:
  • Form OR-21, Oregon Pass-through Entity Elective Tax Return
  • Schedule OR-21-AP, Oregon Pass-through Entity Elective Tax Apportionment of Income
  • Schedule OR-21-MD, Oregon Pass-through Entity Elective Tax Member Directory
  • Schedule OR-21-MD-PT, Pass Through of Distributive Share of Proceeds, Addition and Credit
  • Schedule OR-21-K-1, Distributive Share of Proceeds, Addition and Credit
Form OR-21 is a separately filed return, and you must e-file it.
To add Form RI-PTE to the Rhode Island return, select
File
, then
Client Properties
. Select
RI-PTE Pass-through Entity Tax
 on the Rhode Island tab.
Once added, go to the RIPTE screen and select
Elect to file Form RI-PTE for individual shareholders
.
Form RI-PTE is a separately filed return. You can't file it electronically. Those subject to the electronic filing mandate may need to file Form RI-PTE through the Rhode Island Tax Portal.
To elect PTET, go to the SCGen screen and select
Active Trade/Business Income for electing S Corporation
. Tax is calculated on Schedule I-435 and reported/paid/filed with Form SC1120S. Schedule I-435, Column C defaults to the Schedule, SC1120S K-1, Column D (totaled for all shareholders). Those amounts can be forced on Screen SCAdj.
Utah has online filing only, through Taxpayer Access Point (TAP) website.
The PTE must file and pay SALT tax on or before the last day of the taxable year, then report the amount of SALT tax paid on Form TC-20S, Schedules N, K, and K-1. UltraTax CS will not calculate SALT tax. Use the
AP - Tax paid by pass-through entity
 field on the UTCrS screen to report the SALT tax information that was previously filed/paid through the UT TAP website.
For more information, visit SALT Report & Tax FAQ.
To elect PTET, go to the VAGenS screen and select
Election to pay Virginia income tax at the entity level for the taxable year
. Tax is calculated on Form 502PTET and Form 502PTET ADJ. This return must be e-filed.
For more information, visit Virginia's website.
To elect PTET, enter information on the WVPTE screen to calculate Schedule EK-1, Schedule of WV Partner/Shareholder/Member/Beneficiary Elective Pass-through Entity Income Credit. Any entity that elects to pay the pass-through entity tax will no longer be obligated to file the PTE-100 (S Corporation main form).You'll need to file Form EPT-100 through the WV MyTaxes portal.  WV doesn't expect to have any other EPT-100 substitute forms.
For more information, visit West Virginia's website.
To elect PTET, go to the WIGen2 screen and select
Electing to pay tax at the entity level
. Tax is calculated on Schedule 5S-ET and reported on Form 5S, Page 1.

This article applies to:

  • Product: UltraTax CS
  • Return type: 1120 Corporation
  • State: Alabama, Arizona
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