New in 2022: S-corporations/Partnerships/LLCs can pay CO state income taxes for their shareholders/partners/members - What’s the benefit?
Colorado’s SALT Parity Act allows pass-through entities (PTEs) including S-corporations/Partnerships/LLCs to pay Colorado state income tax at the entity level for shareholders/partners/ members on the PTE’s pass-through income. The benefit to individuals is the side-stepping of the $10,000 Schedule A limit on individual tax deductions, as the tax payments are fully deductible by the entity for federal income tax purposes.
The election does require the PTE to make quarterly estimated payments, as for a C-corporation, if the expected 2022 CO income tax on PTE taxable income is greater than $5,000. Thus if the PTE 2022 expected CO taxable income is greater than $110,000, the entity will need to make quarterly payments of 25% of the expected tax to prevent underpayment penalties. The payment dates are the standard quarterly payments dates of April 15, June 15, September 15, and December 15. Payments are made via EFTPS.
Please call us to discuss this opportunity and calculate any required estimate payments.