Multistate PTETs and Resident Credits

Learning Objectives

• To analyze how the states structure PTET credits.
• To inspect which states, allow the PTET.
• To analyze how each state's PTET credit works.
• To discuss the impact of Multistate PTETs and Resident Credits on the individual owner's tax returns.

Course Description

Before the Tax Cuts and Jobs Act (TCJA), the Internal Revenue Code allowed individuals to claim a deduction for state and local taxes (if itemizing). With the passing of the TCJA, Congress limited the deduction for state and local income taxes to $10,000 for married filing jointly and $5,000 for everyone else. With the severe limitation on itemized deductions, states have created workarounds to allow their residents to deduct the taxes paid to the states.

In response to the TCJA, certain jurisdictions have enacted, or are contemplating the enactment of, tax laws that impose either a mandatory or elective entity-level income tax on partnerships and S corporations (“pass-through entities”) that do business in the jurisdiction or have income derived from or connected with sources within the jurisdiction. 

In most cases, the jurisdiction’s tax law provides corresponding or offsetting owner-level tax benefits, such as a full or partial credit, deduction, or exclusion. Thus, through the pass-through entity, the owners receive a deduction for federal purposes that would have been limited if the SALT were paid by the owner directly.

Key topics covered in this CE Tax course:

• TCJA
• Where Does the SALT Limit Stand?
• Form the 1120S
• Form 1065
• Out-of-State Tax Credit

In this online tax webinar, speaker Nicholas Preusch will look at each state's credits, how they work, and how they impact the individual owner's tax returns.

Note: The webinar primarily centers around Multistate PTET and Resident Credits in 22 states. For additional information covering all 36 states, please refer to the handout available for download. The details for the other 36 states are straightforward and repetitive. Thus, doesn't require to be included in the webinar.

Overview

• Vertical Growth Vs. Horizontal Growth

  2 mins
• Tax cuts and Jobs act

  15 mins
• Limitation on Individual Deductions for taxable years 2018 through 2025

  21 mins
• Owners elect to deduct their portion of taxes paid at the entity level

  30 mins
• Where does the SALT limit stand?

  37 mins
• Out of State tax credit

  46 mins