As a reminder, Illinois requires estimated tax payments for entities (S Corporations and Partnerships) that are electing the PTE for 2022 and expect to have taxable income.
- PTE tax can be a beneficial election as a “state cap workaround” for federal tax purposes – the PTE tax is a deduction from federal income at the entity level.
In the past, estimates were not required for these entity types, but with the changes in the IL tax law, which were effective last year, things have changed.
2022 Estimated tax payment schedules and amounts were set up for our clients, when applicable, when we filed your 2021 returns.
- If you received your return electronically through SafeSend Returns, you will get a reminder email 7 days prior to the due date (upcoming 6/15 payment due date)
- If you received your return via mail, in paper form, those estimated vouchers or amounts were provided in your packet.
- If your return for 2021 is extended, please review with us if any estimates should be paid.
When a partnership or S corporation makes the election to pay the PTE tax, it is required to make quarterly estimated payments if the expected tax due (including both PTE tax and replacement tax) is more than $500; otherwise, they will incur late estimated payment penalties.
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 for the current year.
- 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% of the current year tax liability or 100% of the tax liability in the prior year.
If the election to pay PTE tax is not intended to be made, then estimated payments are not required.
Reminder: You must make electronic payments if your annual tax liability, including PTE tax, meets or exceeds $20,000, through MyTaxIllinois.
If you have any questions or need assistance with these new rules, please reach out to your Porte Brown team member for assistance at 847-956-1040.
