New York's new Pass-Through Entity Tax (P.T.E.T.)

[Fifties01]

Hello.

Has anyone seen anything about whether ProSeries will accommodate New York's new, optional workaround the federal "SALT" (state and local tax) itemized limitation of $10,000, the Pass-Through Entity Tax?

While all filings and payments will be done electronically, online at their portal only, no paper (like F.B.A.R. Form 114), hypothetically ProSeries could accommodate the e-filing of it (like F.B.A.R. Form 114). The Research feature turns up nothing relevant.

Thank you!

[Taxes-by-Rocky]

From NYS DTF's website:

"Only an authorized person may make this election on behalf of an eligible partnership or eligible S corporation. Tax professionals may not make this election on behalf of their clients.

Authorized person: An individual who is eligible to make the election into the PTET on behalf of an eligible partnership or eligible S corporation. For partnerships, authorized person includes any member, partner, owner, or other individual with authority to bind the entity and sign returns under Tax Law § 653. For New York S corporations, authorized person includes any officer, manager, or shareholder of the New York S corporation who is authorized under the law of the state where the corporation is incorporated or under the S corporation’s organizational documents to make the election, and who represents to having that authorization under penalty of perjury.

An authorized person can opt in to the PTET on behalf of an eligible entity through the entity's Business Online Services account. If the entity does not have a Business Online Services account, the authorized person will need to create one."

Suspect the state and the tax software companies could not do the programing and authorizations fast enough.  Agree, makes it a lot more complicated.

[Fifties01]

• Agreed with respect to the election, thank you. I was wondering about the eventual electronic filing of the tax return and extension. It is my understanding that a qualified preparer properly authorized can do that at the portal. Why not through software? If we can e-file F.B.A.R. 114's with FinCEN, normally filable online at a FinCEN portal only, through ProSeries, why not New York's P.T.E.T.? I guess we'll see.

[caj111]

So, I'd like to revive this thread now that filing season is about to begin.  My client elected the pass-through entity tax on his subchapter S corporation return, and made the state tax payment for the tax.  How does he get credit for this payment on his individual New York return? What credit against the New York personal tax do you claim?

[admin5]

Look for form IT-653 on the Individual New York Tax Return.

[caj111]

Thank you very much.  Do you also happen to know if there will be a New York Pass Through Entity Tax return that can be prepared through Pro Series, or can it only be prepared on New York's website?

[IntuitMark304]

Thank you for your comments on NY's Pass-Through entity tax (PTET).  At this time  the annual PTET return can only be completed online via the entity's Business Online Services Account.   

The state is currently not allowing software providers to transmit these filings, therefore filings must be completed on the state's portal.  

[SGrundmanEA]

This has been confirmed by NYS? Wow - what a time waste for Tax Preparers. 

[LarryKalkstein]

Intuit and NY State are disgraceful in handling the PTET matter. I had a 30 minute call with Haley (from Intuit) and a NY Tax Agent Rachel,.. Neither had any idea where to enter the PTET that was paid at the entity level. This is a week ago. Haley promised to get back to me asap. Of course, she has not responded-DISGUSTING SERVICE. I can expect that from the NY Tax Bureaucrats but from Intuit-who I pay lots of money it is UNACCEPTABLE SERVICE.

So, I have all these NY returns that cannot be processed. Hopefully the NY bureaucrats give auto extensions without the need for us to file extensions. Amazing how the state puts mandates on when to file but they drop the ball in providing guidance for this matter.

[dascpa]

Before you **bleep** too much at Intuit here's my PTE story from Maryland.  We were the first state to get this approved by the IRS.  A new form was created end of February last year.  Early March we were told by the Comptroller's office to stop filing all business returns as the form was not correct.  In June the form was re-released.  In early July we were told to stop filing as the calculations on the form were wrong.  We got final ability to file in early August.  The theory behind the PTE is great.  The calculation and implementation is much harder.  

My suggestion - give everyone a break.  20+ states have created this new PTE and they're all just figuring it out.  ProSeries will always be weeks to months behind that.  If needed, file an extension and when the dust settles, complete the PTE.

[caj111]

You know, this is a new situation and the New York legislation was enacted late last year, so I understand that Intuit would not be able to create software to do the PTET return in time but what's disgraceful is that the people who answer the phones at Intuit haven't been any kind of information about this whatsoever.  One of the people I spoke to asked her supervisor and the supervisor didn't know either.  It was on here that I found out that the PTET can only be entered at New York's website.  Would it have been very difficult to inform their call center employees about this? I don't know what kind of training they get, or what kind of reference sheets they have to look at while on the phone but it is clearly inadequate.

[LarryKalkstein]

Not true at all. Intuit really screwed this PTET up and are completely ignorant. Drake Software already has an input screen and produces an attachment to the NY K1 form showing the Taxable NY income and the PTET payment allocation to each Shareholder or Partner. The payment of the PTET is NOT the issue. It is the reporting of the PTET to the individual Shareholders or Partners/Members. We all should consider a Class Action Lawsuit against Intuit for their incompetence. They had at least 4 months to get the input and forms ready-Drake did it!!!

[caj111]

Wow, if that's the case, that is sad.  Question though, does Drake software cost a lot more than ProSeries? I mean, Intuit should have probably had this on their system if Drake did it, but if Drake costs a lot more, you get what you pay for.

But it really gets to me that Intuit didn't send out any kind of notice with regard to New York's PTET or any other state pass-through entity tax because they knew this would be an issue, and they didn't provide any training to their call center people about this issue.  It's like they just blew it off and expected us to find out for ourselves.

[LarryKalkstein]

I do not believe Drake costs more. Actually, from my research about 5 years ago, they were less. My friend and his son (both CPAs) use Drake. I opted for Intuit because it seemed an easier transition from Lacerte. Drake is a fixed price regardless of the # of returns from what I recall.

[IntuitMark304]

LarryKalkstein,

Thank you for your feedback regarding the NY PTET.  Let me try to walk you through how you can input information into the software for the IT-204 and CT-3-S. Hopefully this can help you move forward in the near term.  

On the IT-204, NY instructions for the IT-204 on page 10, it informs the taxpayer, " ....enter the total amount of the PTET and code 653" on lines 144a thru 144f of page 9 on the IT-204.  

By entering the info on these lines in the software, the PTET credit should be allocated to the partners % or specially allocated if desired. 

On the CT-3-S, NY does not provide a code to allocate the credit.  The instructions simply say, "The s corporation must provide to each shareholder a statement indicating the shareholder's pro rata share of PTET taxable income and direct share of PTET credit to be claimed by the shareholder" (I am paraphrasing a bit)

Currently, the user can use the supplemental info worksheet provided on the NY Schedule K-1 for each shareholder to report PTET income and PTET credit for each shareholder.  This will generate a supplement statement for the K-1 based on your entries.  The Supplemental Info Smart Worksheet is at the bottom of the NY K-1 under line 111 in the software.  

We take your feedback seriously and I plan to reach out to customer care and improve the communication to our customers regarding the PTET.  Additionally, I also recognize that entering the PTET info for each shareholder in the s corporation product may be painful for our users.  We will investigate solutions to solve this potential pain point for users.  

[LarryKalkstein]

The problem is that the Intuit Software has no code 653 for Partnership input. When you click on the tax form and click 144a -f to go to those misc. input credits it is so frustrating that code 653 does not exist. I've told the Intuit Idiots this but they are too Inept. They may be geniuses to write software but they cannot turn on a light switch without an instruction booklet. this has ben a total disaster and Intuit definitely owes us a Rebate of the fees not earned!!!

[dmostert]

I looked yesterday morning and this advice wasnt yet posted. Since then, I have figured it out on my own. Came up with the same procedures. Thank you Mark304

[LarryKalkstein]

Please share your self fix, Mark.

Larry

[dmostert]

Scroll up a few messages and read the one from Mark304

[dmostert]

Mark304 for the addback required to NYS - will the partnership program add A-219 to the additions? 

[IntuitMark304]

dmostert,

The A-219 addition is not permitted as an adjustment to the IT-204 at this time.  This addition is only utilized on IT-201, IT-203 and IT-205 filings.  Please see page 18 of the IT-225 instructions.  I am also including a screen shot.  Please let me know if you have additional questions. 

Best,

Mark304

[IntuitMark304]

LarryKalkstein,

On the IT-204, navigate to page 9, line 144a-thru f.

In the Code column, enter "653" to signify to NY the credit is related to the PTET. 

In the Amount column, enter the total PTET credit required to reported to the partners.

Please review pages 9 and 10 of the IT-204 instructions for treatment of the PTET on the IT-204.  

Entries on line 144a - f will be allocated to the partner K-1 IP on line 47a though 47l or K-1, CP line 77a through 77l.

I understand you are frustrated and hope this clarifies the treatment of the PTET credit as required by NY.  

[IntuitMark304]

I have good news to share.  With the recent release of NY to allow efiling, functionality on the CT-3-S has been added to allow users to enter the total PTET taxable income and credit on the CT-34-SH, pg 1 -3 form.  Scroll to the bottom and there is a worksheet that allows input of the PTET information.  

These inputs will be allocated prorata to the shareholders as required for s corporations as part of the supplemental statement on each K-1.  

Hopefully this will reduce the pain point requiring users to input the amounts for each shareholder.  Thanks to everyone for their input.  

[Sparkle19]

I just installed the latest Lacerte update.  I can't find the worksheet you are referring to.

[IntuitMark304]

Sparkle19, 

In your comment you mentioned you just updated your Lacerte software.  This is a community focused on discussing Proseries software.  I would post your question in the Lacerte community for more help.  https://proconnect.intuit.com/community/lacerte-tax/discussion/03/302

[edrotman]

I don’t know much about drake tax software but intuit is terrible on their knowledge of this. I spent half the day searching for a ptet filing for nys.  Obviously I found nothing 

[Sparkle19]

The NYS PTET 2021 annual return must be filed through NYS online services.  NYS is not allowing tax software companies to file return for 2021.  Form can either be filed though your NYS online services or your client's.

[LarryKalkstein]

Intuit management certainly gets a failing grade on PTET. they knew of this back in August 2021 and only when we called in January 2022 did they start to realize they had not prepared for it. They should be solely responsible if any tax penalties arise from the PTET issue.

[caj111]

Why they couldn't have mentioned this ahead of time or put out some kind of alert befuddles me.

[Adriane S]

please see my post on the thread related to Lacerte with instructions on how to enter everything on a 1065. 

https://proconnect.intuit.com/community/lacerte-tax-idea-exchange/there-is-no-where-in-the-program-t...

[pgershon]

Yesterday, Intuit finally released the NYS partnership forms for Turbo Tax business.  But the treatment of the A-219 addition to NYS income for the PTET expenses (included in federal income) does not work.  In order to get the EA-219 reported on line 20 of partners NYS K-1 forms, form IT-225 must be filled in with the partnership's A-219 amount.  But when the A-219 selection is made from the drop box, it turns red and TurboTax reports an error.  The IT-225 instructions say not to fill out the form for IT-204 filers.  But it is needed to get the K-1 information to partners.  I do not see a workaround.

[IntuitMark304]

The A-219 addback you are referencing is only eligible to be used on the IT-201, IT-203 and IT-205 filings. 

To report the PTET tax paid by the partnership and the resulting PTET tax credit to the partners follow the instructions below:

On the IT-204, navigate to page 9, line 144a-thru f.

In the Code column, enter "653" to signify to NY the credit is related to the PTET. 

In the Amount column, enter the total PTET credit required to reported to the partners.

Please review pages 9 and 10 of the IT-204 instructions for treatment of the PTET on the IT-204.  

Entries on line 144a - f will be allocated to the partner K-1 IP on line 47a though 47l or K-1, CP line 77a through 77l.

[pgershon]

Mark, thank you but that only covers half of what needs to be reported.  Each partner gets a credit for the PTET paid.  And that credit is reported on page 9 line 144a-f of the IT-204, exactly as you state.

However, in addition to the credit, the NYS income to be taxed is supposed to be the federal income as reported PLUS the PTET that was paid in 2021.  The actual PTET Annual Return (on State website, not Intuit) has separate lines for (i) the PTET due for 2021 and (ii) the PTET payments made with estimates during 2021.  (i) is the credit reported on line 144a-f, and (ii) is the amount that reduced reported federal income and must be added back in computing state income.  Line 20 of each NYS partner's K-1 should have their allocated portion of (ii) above, reported as EA-219.  Partners need to know their allocated amount of PTET was deducted from federal income in order to add it back, and Line 20 of the K-1 seems like the only place to do that.

Using TurboTax Business, when I fill in IT-225, the partner K-1's have proper amounts in line 20.  Having said that, I do realize that the IT-225 instructions say A-219 is not for IT-204 filers, but I believe that was an error in the instructions.  I see no other logical interpretation. 

[IntuitMark304]

I cannot speak to what is on the Annual PTET Return for New York as it was developed by NY and is only completed through their online services.  

What I can tell you is that if  Proseries disregards the IT-225 instructions and allows filers of the IT-204 to record an A-219 adjustment, the return will reject when e-filing.  NY has rules in place that will kick it back to the filer

For more color on the topic, let's review the IT-225 instructions.  They read as follows on the A-219 adjustment for PTET: 

"If you claimed the PTET credit during the current tax year by filing Form IT-653, then enter the amount of the credit claimed."

This adjustment is only an addback of the PTET tax paid by the entity and then passed down as a credit to the partner.  The reconciliation of the payments and actual tax at the entity level are of no concern to the partner on their separate filing.  

As NY currently has the form set up, adding another adjustment to the K-1 will result in two addbacks at the partner level as they are being instructed to  add back their credits coming from the IT-653 form.  

I understand there is a lot of confusion around this and encourage you to reach out to NY for more clarification and to share your thoughts and opinions.  

[pgershon]

Thanks again Mark for your message.  

I believe the problem comes from the fact that for calendar year 2021 ONLY, estimates of PTET payments were permitted but not required and there was still a lot of noise around the forms and icing procedures at year end.  In the case of my partnership at least, 99.24% of the PTET was paid in 2021 while the remaining 0.76% was paid in 2022 with the form.  From an IRS perspective, only the 99.24% was a 2021 expense (the rest was a 2022 expense, assuming cash basis accounting), but from the NYS perspective, the 100% of the PTET is an income tax credit.  

I suppose one workaround would be to consider the whole PTET an expense from IRS point of view as well (and treat the portion paid in 2022 as a payable for 2021).  While I dont think a "clean" solution, probably OK here since the <1% involved can be views as de minimis. 

FYIW, my personal Turbotax Premier let me report the amount on Line 20 of the NYS k-1 as the add back amount (and not the actual PTET credit).  In other words, TurboTax Premier worked fine using different amounts for the A-219 and the IT-653 (it did not double add back).  But unless I figure something out soon,  I will go with the workaround I described above instead as it will likely raise fewer flags. 

[IntuitMark304]

The accountant in all of us wants this stuff to be black and white.  But there is definitely some art to this all as we try to make things work in this constantly evolving PTET world..  I appreciate the comments and the conversation.   I know I always learn something new during the process.  

[Mel72]

I am not an accountant and am using Turbotax Home & Business. I have a NY Partner's Schedule K-1 IT-204-IP that has a line 47a with code 653 an an amount. Where do I enter this in the program?

[mhaws]

I have the same question (sorry not to be able to help). There is also nowhere in the online version of TurboTax to enter in any of the NYS estimated tax payments the partnership made on my behalf.

[Mel72]

My firm made PTET credit payments for me, not estimated tax payments. I assume you can add the estimated tax payment made by your firm, if that is true, where your estimated payments are listed.

I figured out how to account for the PTET credit payments. In the NYS part of the TurboTax program at Uncommon Credits, check the next-to-last box entitled "Claim for Pass-Through Entity Tax Credit (IT-653)." When you hit "continue" form 653 pops up. Enter the employer name and Tax ID. Then enter the amount of the PTET payment by your firm. It should then ripple through.

[abrakadabracpa]

Hi Mark, I have a questions about inputting the this information into the individuals tax return.   I found field 47a with code 653.   Where do I enter this on the individuals non-resident k-1?

[rosin850]

Responding to Mel72:

"I figured out how to account for the PTET credit payments. In the NYS part of the TurboTax program at Uncommon Credits, check the next-to-last box entitled "Claim for Pass-Through Entity Tax Credit (IT-653)." When you hit "continue" form 653 pops up. Enter the employer name and Tax ID. Then enter the amount of the PTET payment by your firm. It should then ripple through."

THANK YOU!!!!! This worked for me after spending an hour searching through TT on how to do it.