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18011: KS - SALT Parity Act (PTET)


Kansas

How do I make the election to pay pass-through entity tax under the SALT Parity Act for Kansas? Where does a shareholder/partner enter the amount on their individual or fiduciary return? 

 

The SALT Parity Act allows electing S-corporations or Partnerships to elect to be taxed at the entity level which allows eligible members to take a credit on their individual or fiduciary return for taxes paid. An eligible member may be a shareholder, partner, fiduciary, or Single Member LLCs (if taxed as an individual) of an electing entity.

Per the Kansas FAQ page: 

"The pass-through entity shall be subject to a tax in an amount equal to 5.7% of the sum of each resident electing pass-through entity owner’s distributive share of the electing passthrough entity’s income and each nonresident electing pass-through entity owner’s distributive share of income attributable to the state."

1120-S or 1065

In Drake Tax, to make the election, go to KS screen 1 and mark the box N Electing to be subject to tax at the entity level.

  • Form KS 9 generates for each shareholder/partner showing the taxable income information so that the member can claim a credit on their individual return.
  • KS 120V is produced showing the payment amount. The payment can be made through Drake Tax by completing the federal PMT screen. In this circumstance, a watermark is printed across the voucher to prevent it from being paper-filed.
    • If the entity does not want to arrange a direct debit, the payments can be made online through the KS DOR .
    • Alternatively, a check may be mailed with the voucher to: 

Kansas Corporate Tax
Kansas Department of Revenue
PO Box 750260
Topeka, KS 66699-0260​

Note that this election can be made annually, but it cannot be revoked once made.  

1040

In Drake Tax, open KS screen 40 and enter the credit amount on line 26. Per the field help: "Enter the "net tax" paid on your behalf by each electing pass through entity in which you are a partner, shareholder, or member. This amount can be found on Form K-9, Statement of Partnership or S-Corporation Tax Paid, Part C. Enclose form K-9 when filing this return." 

On the KS > Other tab > complete the PDF screen to indicate that you are going to attach Schedule K-9. Then, in View/Print mode, attach the PDF of the Schedule K-9 that the taxpayer received from the electing pass-through entity. 

The credit amount will show on Form KS 40, line 26. 

1041

In Drake Tax, open KS screen K41 and enter the credit amount on line 16Per the field help: "Enter the "net tax" paid on your behalf by each electing pass through entity in which you are a partner, shareholder, or member. This amount can be found on Form K-9, Statement of Partnership or S-Corporation Tax Paid, Part C. Enclose form K-9 when filing this return." 

In View/Print mode, attach the PDF of the Schedule K-9 that the taxpayer received from the electing pass-through entity to clear EF Message 0759. The required name of the PDF is KS9.pdf

The credit amount will show on Form KS 41, line 16


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