How to enter a California PTE credit in ProConnect Tax

California A.B. 150, also known as the Pass-Through Entity Elective tax, allows state tax on passthrough income to be paid at the entity level at a flat rate of 9.3%. The law is effective for tax years beginning on or after January 1, 2021, and before January 1, 2026.

For business filers:

• See Generating PTE tax in California Partnerships or
• See Generating PTE tax in California S Corporations

For individual filers:

Follow these steps to enter a PTE tax credit received on a partnership K-1:

1. Go to Input Return ⮕ Income ⮕ Passthrough K-1's. ⮕ Partnership Info (1065 K-1)
2. Select the Lines 11-20 tab.
3. Scroll down to the Line 15 - Credits and Withholding section.
4. Enter the 15f amount in Credit from passthrough elective entity tax (PTE) {CA}.

Follow these steps to enter a PTE tax credit received on an S corporation K-1:

1. Go to Input Return ⮕ Income ⮕ Passthrough K-1's. ⮕ S-Corp Info (1120S K-1)
2. Select the Lines 11-17 tab.
3. Scroll down to the Line 13 - Credits and Withholding section.
4. Enter the 13d amount in Credit from passthrough elective entity tax (PTE) {CA}.

The PTE elective tax credit will flow to form 3804-CR. This is a nonrefundable credit. Any credit disallowed based on these provisions will carryover to future returns.

Starting with tax year 2022, a partner or shareholder may be able to claim an Other State Tax Credit for their pro rata share of PTE tax paid to another state. Review the Schedule S instructions for more information.