Iowa Provides Guidance on Pass-Through Entity Tax for 2022 Tax Year
The Iowa Department of Revenue has issued guidance on the rules and implementation of the new Iowa Pass-Through Entity Tax (PTET). This voluntary election allows passthrough entity owners potential tax savings by fully deducting state and local taxes related to their pass-through entity without being limited by the individual income state and local tax (SALT) limitation.
Since the election is being applied retroactively for the 2022 tax year, the election will be made outside of the entity’s 2022 tax return filing and does not require an amended return if the entity has already filed for the tax year.
If electing, entity owners will receive a state tax credit to be claimed on their originally filed or amended 2022 individual Iowa income tax return. Those entity owners who may have already paid their 2022 Iowa tax liability will receive a refund.
The Iowa Department of Revenue is targeting October 1st as a release date for the PTET election and reporting forms, which will be available through GovConnectIowa. Your tax advisor will be reaching out to discuss once the forms and timeline are finalized.