18481: IL - Pass-Through Entity Tax

Illinois law allows certain pass-through entities to make an election to pay tax at the entity level. If the S corporation or partnership makes this election, they are then called an "electing pass-through entity." Members of an electing pass-through entity are eligible for a credit on their individual return. See Illinois Publication 129 for details.

The election must be filed no later than the due date or extended due date of the return. The election can be made annually. Once the election is made for the tax year, it cannot be revoked after the extended due date.

IL-1065/IL-1120-ST

Make the election by going to IL screen INFO and selecting Check this box if you elected to file and pay Pass-through Entity Tax.

If pass-through entity taxes were already paid by estimates for this year, enter the amount on the left-hand side of the federal ES screen, using a St/City of IL and a Type of PT.

IMPORTANT: When the PTE taxes are deducted on the federal return (federal ES screen), you must manually add-back the amount of tax deducted by going to IL screen 1 and entering the total on line 16, Illinois replacement tax deducted in arriving at the unmodified base income.

If pass-through entity taxes were not already paid by estimates, or there is balance due remaining after the payments, Form IL-1065-V (partnership) or IL-1120ST-V (S corporation) is generated, showing any amount due. If e-filing the return, payments can be made using federal screen PMT.

To generate quarterly estimated tax vouchers for the upcoming year, use the right-hand side of the federal ES screen, entering a St/City of IL and a Type of PT.

1040

Complete IL screen K1P, including the Pass-through Entity Tax Credit on line 53a. This amount carries to Form IL-1040, line 28.