How to enter Arizona PTE in ProConnect Tax

This article will help you report the elective pass-through entity tax (sometimes called PTE, PTET, PET, or SALT workaround) and the resulting credit.

For more PTE resources, check out our dedicated Tax topics page where you'll find a list of all PTE states and the respective content for each.

Table of contents:

Individual

1. From the Input Return tab, go to State & Local ⮕ Modifications.
2. Select AZ Modifications from the left navigation.
3. Under the Arizona Additions section, enter the amount from the K-1 in the Entity-level income tax payment field.
   • This amount flows to Form 140NR, line K and Form 140, Page 5, line P.

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Partnership

1. From the Input Return tab, go to State & Local ⮕ Miscellaneous Information ⮕ Arizona Miscellaneous.
2. Under the Partnership Tax Paid At Entity Level (PTE) section, check Electing PTE taxes or enter the amount paid in Arizona PTE taxes paid in 2024 for taxable years prior to 2024.
   • The tax is calculated on page 2, part II of Form 165.

Additional entries may be needed in this section, depending on your client needs. For example:

• Arizona PTE taxes paid in 2024: 165 Sch K-1, part VI, line 22
• Comparable PTE taxes from other states paid in 2024: 165 Sch K-1, part VI, line 23

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S Corporation

1. From the Input Return tab, go to State & Local ⮕ Miscellaneous ⮕ AZ Miscellaneous.
2. Under the Arizona PTE Taxes section, check Electing PTE taxes or enter the amount paid in Arizona PTE taxes paid in 2024 for taxable years prior to 2024.
   • The tax is calculated on page 2, part II of Form 120s.

Additional entries may be needed in this section, depending on your client needs. For example:

• Arizona PTE taxes paid in 2024: 165 Sch K-1, part VI, line 21
• Comparable PTE taxes from other states paid in 2024: 165 Sch K-1, part VI, line 22

The shareholder can also make an election to opt out. To do this, go to the Input Return tab, then State & Local ⮕AZ Schedule K-1 Overrides

If needed, overrides are available in the Arizona PTE Taxes section of the State & Local ⮕ AZ Schedule K-1 Overrides screen.

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