NC-429B PTE: Underpayment of Estimated Tax by Taxed Pass-Through Entities (2024)

Who files this form

Taxed S Corporations and Taxed Partnerships use Form NC-429B PTE to determine whether they owe interest on underpaid estimated tax and to calculate that interest. Keep this form for your records; do not attach it to the entity’s tax return.

A Taxed PTE that reasonably expects North Carolina income tax liability of $500 or more must make estimated tax payments, unless its tax year is less than four months.

Generally, interest applies if the income tax due is $500 or more and the entity did not timely pay at least the smaller of:

• 90% of the income tax due on its 2024 Taxed PTE return.
• 100% of the income tax due on its 2023 Taxed PTE return.

Important exceptions:

• If the entity did not elect to be a Taxed PTE in North Carolina during the preceding tax year, it is not subject to this interest.
• If 90% of the 2024 net tax due on Line 4 is less than $500, do not complete the form. The entity does not owe interest on underpaid estimated tax.

When it's due

For the 2024 tax year, Line 7 lists estimated tax installment due dates as the 15th day of the 4th, 6th, 9th, and 12th months of the entity’s tax year.

For the 2024 underpayment calculation, Line 16 uses the payment date or the 15th day of the 4th month after the tax year closes, whichever is earlier.

What you'll need

Have these items available to complete the form:

• The entity’s legal name and Federal Employer ID Number.
• The 2024 Form CD-401S or Form D-403, for net income tax and tax credits.
• The 2023 Form CD-401S or Form D-403, for prior-year net tax due.
• Records of estimated tax payments, payments by partnerships on the entity’s behalf, and nonresident withholding.
• Payment dates needed to calculate the underpayment period.

If using the annualized income installment method, attach a schedule showing the installment computations and retain the computations for future reference.

How to file

Do not attach Form NC-429B PTE to the Taxed PTE’s tax return. Retain it for your records.

Enter the total from Line 22 on the applicable return:

• Form CD-401S, Schedule B, Line 27.
• Form D-403, Part 1, Line 21c.

Common mistakes

• Completing the form when Line 4 is less than $500. The form says to stop because no underpayment interest is owed.
• Overlooking the prior-year election exception. An entity that did not elect Taxed PTE status in North Carolina during the preceding tax year is not subject to this interest.
• Assuming a later payment or refund eliminates earlier interest. Interest is calculated separately for each installment due date, so an earlier underpayment can still result in interest.
• Completing Lines 10–13 across all columns at once. Complete one column before moving to the next.
• Applying a payment only to the current installment. Payments first cover previous installment underpayments. If there is more than one payment for a required installment, make separate computations for each payment.
• Attaching the form to the tax return. Keep it for your records instead.

Questions people ask

Can the entity owe interest even if its return shows a refund?

Yes. Interest is calculated separately for each installment due date. A later payment does not necessarily eliminate interest on an earlier underpayment, even if the return shows a refund.

Can annualizing income reduce the interest?

Yes. The annualized income installment method may reduce or eliminate underpayment interest. Enter the computed installments on Line 8, attach a schedule showing the calculations, and retain the computations for future reference.

Where can I find the interest rate?

The Secretary of Revenue sets the rate semiannually under G.S. 105-241.21(a). The form directs you to visit ncdor.gov and search for “interest rate.”

What if the entity did not elect Taxed PTE status in the preceding tax year?

It is not subject to interest on underpayment of estimated tax.

Do I submit NC-429B PTE with the tax return?

No. Retain it for your records. Transfer the Line 22 amount to Form CD-401S, Schedule B, Line 27, or Form D-403, Part 1, Line 21c.

Official sources

• https://www.ncdor.gov/2024-nc-429b-pte/open