Where to enter Composite Tax Credit on IA 1040 Individual Tax Return?

[JMac2021]

I am preparing an IA 1040 individual tax return for a non-resident who received a 2022 IA 1120S Schedule K-1 reporting an Iowa Composite tax paid on behalf of the shareholder and cannot find where this information is entered into the individual's tax return. 

I'm aware the composite credit is refundable, so it should end up on Line 62 of the IA 1040, however I cannot find the IA Schedule CC mentioned in the instructions provided by the Iowa Department of Revenue within Proseries or where the credit information is entered into the software. Is it Form IA 148TP? There is no tax credit code provided in the instructions or this type of credit on the form. Overriding Line 62 creates an error and cannot efile...

[sjrcpa]

If the S Corp filed an Iowa Composite return for the nonresidents of Iowa, they did that so the nonresidents of Iowa do not have to file nonresident Iowa tax returns.

Your client may be eligible for a credit for tax paid to Iowa on his resident state return.

[JMac2021]

It is my understanding that starting this year IA based S Corporations are required to file the IA PTE-C for nonresident shareholders of S Corporations. The limited exceptions to the rule in the instructions do not apply to their business. 

The client has other Iowa income and must still file a personal Iowa tax return. 

In the IA 1040 instructions it mentions that composite credits are entered into the IA Schedule CC (not available on Proseries), which then is used to apply composite credits to Line 62 (Other Refundable Credits). Are other filers just mailing the Iowa returns with these credits, instead of efiling? 

[Avs19]

How would I show the credit paid to another State (Colorado in my situation) if not actually filing an Iowa return? Colorado is going to require to see the Iowa return.

There is an electing pass through entity owner tax credit line but I would assume that is only for Colorado PTEs.

[sjrcpa]

Most states accept the nonresident K-1 if it shows the income taxable in that state and the composite tax paid to that state.

Some states are getting annoying and asking for the actual composite returns. 

[Avs19]

Thanks!

[Pgrady09]

Were you ever able to solve this issue? I cannot seem to claim the IA PTE composite credit in proseries. IA Schedule CC doesn't seem to be in proseries.

[Avs19]

I did what sjrcpa suggested. I didn't file an IA return and attached the K1 to the other state return.

I hope that helps

[Hub]

I completely agree. If you use IA 148 TP in the Part II section under Refundable Tax Credits there is not a code for the PTE tax for nonresident shareholders that also have other operations in IA. It looks like we can't file IA return electronically, but can input in Column K the amounts received from the S Corp PTE amounts. It then totaled the amounts and did put them on line 62 of IA 1040.

Does ProSeries even look at these issues. 

[JMac2021]

I did a work around. I had my client sign a 41-175 2022 IA Nonresident Member Composite Agreement (I was not aware of this document when I initially wrote my question). It excludes the nonresident member from the pass-through entity's composite return for 2022. The document stays in the pass-through entity's records (and mine) if requested by the Dept of Revenue. It required I file an Iowa return, however I was already planning to do so.