The first installment of Pass-through Entity (PTE) estimated tax payments for 2022 are due by 4/18/2022. You may need to take action if this already hasn’t been addressed and want to take advantage of this tax benefit. Please reach out to your TKO representative if you have questions regarding your potential PTE tax liability for Illinois or any other eligible state.
What is the PTE Tax?
The Pass-through Entity (PTE) tax is an entity-level income tax that partnerships and subchapter S corporations may elect to pay. For eligible Illinois businesses, this is effective for tax years ending on or after December 31, 2021, and beginning prior to January 1, 2026. The PTE tax rate is equal to 4.95 percent (.0495) of the taxpayer’s net income for the taxable year. A partnership or S corporation making the election is liable for paying the PTE tax. If the electing partnership or S corporation fails to pay the full amount of PTE tax deemed assessed, the partners or shareholders will receive credit for the amount of PTE tax credit paid but shall be liable to pay any remaining tax (including penalties and interest) based on their share of the pass-through entity’s income and credits.
For tax years ending on and after December 31, 2022:
- If the election to pay PTE tax is made, then estimated payments are based on the sum of the PTE tax and replacement tax. If a taxpayer paid PTE tax for the prior year, whether as estimated, extension or return payments, then the total minimum required estimated payments are 90 percent of the current year tax liability or 100 percent of the tax liability in the prior year.
- If the election to pay PTE tax is not made, then estimated payments are not required.
Estimated payments can be made:
- electronically using MyTax Illinoisor ACH Credit or
- by mail using 2022 Form IL-1065-V, Payment Voucher for Partnership Replacement Tax, or2022 Form IL-1120-ST-V, Payment Voucher for Small Business Corporation Replacement Tax.
For more specific Q&A regarding Illinois PTE visit their website here –https://www2.illinois.gov