PTE: Pass-through Entity Tax (2024)
Minnesota · Minnesota DOR · Used for tax years 2024
Minnesota Schedule PTE is used by partnerships and S corporations, including LLCs taxed as either, to elect to pay income tax at the entity level on behalf of qualifying owners. It calculates the pass-through entity tax and reports how the PTE tax credit is distributed among qual
Who files this form
Partnerships and S corporations must complete Schedule PTE if they elect to pay income tax at the entity level on behalf of their owners. This includes LLCs taxed as partnerships or S corporations.
An entity with one or more qualifying owners may elect. The text allows a partial election when not all owners are qualifying owners. Single-member LLCs not taxed as S corporations are not eligible.
What you'll need
Have these forms and details available to complete Schedule PTE:
- Form M3 or M8, which you file with Schedule PTE.
- The entity’s name, federal employer identification number (FEIN), and Minnesota Tax ID number.
- Form M3A or M8A for the Minnesota apportionment factor.
- Federal Schedules K-1 and Minnesota Schedules KPI or KS for owner income, adjustments, and credits.
- Each qualifying owner’s name, Social Security number or tax identification number, Minnesota residency status, share of income, and share of taxes paid.
- Schedule PTE-RP, if applicable, for the amount entered on line 28.
- Prior-year bonus depreciation and Section 179 addback information, along with information about whether owners were included in composite returns or Schedule PTE, if claiming the delayed subtractions.
Partnerships including guaranteed payments or special allocations in the PTE tax calculation must include a statement explaining how each affected partner’s share of taxes paid was determined.
How to file
Make the election by completing Schedule PTE and filing it with Form M3 or M8.
- Complete Part 1 to calculate the entity-level tax. Lines 1 through 27 use amounts attributable to qualifying shareholders and nonresident qualifying partners. Enter the amount from Schedule PTE-RP, line 13, on line 28.
- Add lines 21, 27, and 28. Enter the total on Schedule PTE, line 29, and on Form M3, line 2, or Form M8, line 3.
- Complete Part 2 for all qualifying owners, including partners whose amounts are included on Schedule PTE-RP.
- If there are more than 10 owners, attach additional copies of Part 2 for the remaining owners.
- Also report each owner’s share of PTE tax on line 33 of their Schedule KPI or KS.
The supplied text does not provide a mailing address or e-filing directions.
Common mistakes
- Including ineligible owners’ amounts. Do not include amounts attributable to owners who are exempt from income tax or who are not qualifying owners.
- Treating resident shareholders differently when completing Schedule KS. Complete all lines of Schedule KS for all shareholders as if they were nonresidents.
- Including resident partners on line 15. Partnerships must not include amounts attributable to resident partners on that line.
- Using excluded prior-year amounts on lines 23 or 24. Do not include amounts distributed in a year for which the owner filed Form M1.
- Entering a negative amount on line 27. After applying the specified credits, do not enter less than $0.
- Omitting the filing-requirement checkbox. Check the box next to line 33 of Schedule KPI or KS for owners whose Minnesota income tax filing requirement is fulfilled by Schedule PTE.
Questions people ask
Who must approve the PTE election?
The election may only be made by qualifying owners who collectively own more than 50% of the portion of the entity owned by qualifying owners. Once made, it is binding on all qualifying owners.
Can the election be revoked?
The election cannot be revoked after the entity’s original return due date.
Does Schedule PTE replace a Minnesota resident owner’s individual return?
No. Partners and shareholders who were Minnesota residents at any time during the tax year cannot use the entity-level tax to fulfill their Minnesota income tax filing requirement. They must file Form M1 if they are required to file a federal income tax return.
How do owners claim credit for tax paid on their behalf?
Partners and shareholders may claim a refundable credit equal to the PTE tax the entity paid on their behalf. The credit is reported on Schedule M1REF or Form M2.