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#USING TURBOTAX FOR S CORP CODE#

There is no requirement for duplicative payments under Chapter 63D or in the Massachusetts withholding rules. Will PTEs be required to pay both the PTE Excise and PTE withholding tax on the same income in 2021? (Added 11/30/21) The statutory rates that apply to each class of income must nevertheless, as relevant, be applied on the return of each qualified member. If a PTE makes an election to pay the PTE Excise, the entity’s income is taxed at a rate of 5%, regardless of whether the income is Part A, B or C income under the Massachusetts personal income tax statute. Partner D may make its own election to be subject to the PTE Excise. Its un-apportioned 25% of the $1,000 income flows up to its own Form 3 return. *Note that in this example no PTE Excise is allocable to Partner D-the upper-tier PTE-regardless of the identity of the partners of Partner D.

Apply 5% PTE Excise rate to such income ($625 x 5% = $31.25).

Partner D is not a qualified member and its share of income is not taken into account under the PTE Excise. Partners A and B each have $250 of income ($1,000 x 25%).

Determine the amount of taxable income allocable to each partner.

Determine the partners subject to tax in Massachusetts under chapter 62.

The PTE Excise would be calculated as follows:

Partners A and B are Massachusetts resident individuals.

Partnership net income for 2021 is $1,000.

Partnership ABCD does business in MA with 50% apportionment.

Several factors must be taken into account as illustrated by the following simplified example: Once the election is made, how is the PTE Excise calculated under chapter 63D? Sole proprietorships and single-member limited liability companies that are disregarded for federal income tax purposes cannot elect to be subject to the PTE Excise because they are not pass-through entities.

Trusts, to the extent that they have income that is taken into account by beneficiaries for Massachusetts personal income tax purposes.

S corporations, including limited liability companies that are treated as S corporations for federal income tax purposes and.

Partnerships, including limited liability companies that are treated as partnerships for federal income tax purposes, but excluding publicly-traded partnerships.

Accordingly, the following entities may elect to be subject to the excise: In addition, a trust can make the election with respect to income that passes through the trust to beneficiaries that are subject to tax on that income under the Massachusetts personal income tax.

#USING TURBOTAX FOR S CORP CODE#

“Eligible pass-through entity” is defined as an S corporation under section 1361 of the Internal Revenue Code (Code), a partnership under section 7701 of the Code or a limited liability company that is treated as an S corporation or partnership under those Code sections.

Only an eligible pass-through entity can make an election to pay the PTE Excise. Who is eligible to make an election to pay the PTE Excise under chapter 63D? (Updated 12/15/21) Taxpayers should consult their tax advisors to determine whether they might benefit from the election. The PTE Excise must be paid electronically.

To elect the excise, a PTE must file electronically Form 63D-ELT, their income tax return, and all schedules. Qualified members of an electing PTE are eligible for a credit equal to 90% of a member’s distributive share of PTE Excise paid. The law will expire if the federal SALT deduction limitation expires or is repealed. Under the new legislation, for tax years beginning on or after January 1, 2021, entities taxed as S corporations and partnerships, and certain trusts, may elect annually to be subject to the pass-through entity excise (PTE Excise) at a rate of 5%. Massachusetts joins several other states in enacting an entity-level excise that responds to the SALT cap. On September 30, 2021, the Massachusetts Legislature enacted an elective pass-through entity (PTE) excise in response to the $10,000 cap on the federal state and local tax (SALT) deduction added in the 2017 federal Tax Cuts and Jobs Act.