It’s time to consider 2022 Minnesota PTE and Q1 estimated tax payments
by Riley Petersen, CPA
Since the Tax Cut and Jobs Act was passed, there’s been a $10,000 limit on the deduction for state taxes paid by individuals on their federal returns. A growing number of states, including Minnesota, now offer workarounds to this personal state tax deduction limitation. Effective in 2021, qualifying partnerships and S Corporations can elect annually to pay and deduct Minnesota income tax at the entity level on behalf of their qualifying owners under the pass-through entity (PTE) tax election. This new PTE tax election allows eligible pass-through business owners to receive a federal tax benefit by treating the state taxes paid as a valid deduction on the business tax returns.
Owners of business in the professional services industry need to be aware of the volume and complexity of the various states’ rules that could be relevant to maximizing the intended federal income tax benefits associated with PTE tax elections. For more information, or to review whether or not your business qualifies or for the credit, visit the Minnesota department of revenue’s website, or this previous post on our website.
For calendar year taxpayers, now is the time for qualifying professional services firms and businesses to consider making estimated tax payments towards the 2022 tax liability. The first quarter’s estimated tax payment is due Monday, April 18th.
If you are unsure if your organization is eligible for the Minnesota PTE Tax Election, curious about the available PTE elections in other states, or would like guidance on the proper amount to pay in as a first quarter tax estimate, please reach out to your trusted Abdo advisor and we can help!
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