How to enter Kentucky PTE in Lacerte

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.

Starting in tax year 2022:

• Starting in March 2023, pass-through entities can elect to pay it's tax liabilities on behalf of it's individual partners, members, or shareholders for tax years beginning on or after January 1, 2022. This was retroactive for tax year 2022 returns.
• For taxable years beginning on or after January 1, 2023, an authorized person must file Form 740-PTET to make the election.
• For additional information, see the department's FAQ's.

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.

Select your tax type:

Individual

1. Go to Screen 20, Passthrough K-1's.
2. Select the K-1 that needs the PTET-CR information entered.
3. From the sections select (EF ONLY) Kentucky Form PTE-WH (Form 740-NP only)/Form PTET-CR
4. Check the Form PTET-CR checkbox.
5. Complete the following fields if applicable:
   • KY LLET account number.
   • Distributive share amount of income subject to withholding.
   • Tax before credit amount.
   • Distributive share of credits amount.
   • KY taxes withheld/paid by entity
6. Go to Screen 53, State & Local - Other Credits.
7. Select Kentucky Schedule ITC.
8. From the Sections select Kentucky Refundable Credits.
9. Enter any Refundable pass-through entity tax credits from Form PTET-CR.

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Partnership

The KY Form PTE will generate automatically but tax will not be calculated on it until the election is made. If the Partnership would like to Elect to pay income tax at the entity level and generate the Form 740-PTEP:

1. Go to Screen 40, Adjustments and select Kentucky from the state list on the top left panel.
2. From the Sections panel on the bottom left, select KY Pass-through Entity Tax (Form 740-PTET) / KY NR Income Tax Withholding on Net Distributive Share Income Report (Form 740NP-WH).
3. Check the box Election to pay income tax at the entity level (triggers the 740-PTET).
   • This will suppress the Form 740NP-WH and generate the 740-PTET.
4. The PTET-CR will generate for each Partner showing the Kentucky income tax paid by the entity.
5. Scroll down or use the sections panel to find 2025 Pass-Through Entity Estimated Tax (Form 740-PTET-ES), and fill out all relevant information in the fields.

In the event that the partnership receives a credit on a K-1:

1. Go to the Screen 23, Passthrough K-1's
2. Use the bottom left panel to select Kentucky LLET Pass-Through Items.
3. Fill out all relevant information.

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S-Corporation

The KY Form PTE will generate automatically but tax will not be calculated on it until the election is made. If the S Corporation would like to Elect to pay income tax at the entity level and generate the Form 740-PTEP:

1. Go to Screen 44, Adjustments and select Kentucky from the state list.
2. From the Sections list select Kentucky Form 740NP-WH/Form 740-PTET.
3. Check the box Election to pay income tax at the entity level (triggers the 740-PTET).
   • This will suppress the Form 740NP-WH and generate the 740-PTET.
4. The PTET-CR will generate for each shareholder showing the Kentucky income tax paid by the entity.
5. Scroll down or use the sections panel to find 2025 Kentucky Pass-Through Entity Estimated Tax (Form 740-PTET-ES), and fill out all relevant information in the fields.

In the event that the S Corporation receives a credit on a K-1:

1. Go to the Screen 23, Passthrough K-1's
2. Use the bottom left panel to select Kentucky LLET Pass-Through Items.
3. Fill out all relevant information.

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