OR-PTE-E

Greetings from Riley Wigle CPAs!

We hope that you are enjoying the first days of warmer weather. As seasons change, so do tax laws and we want to update you on new legislation that could allow for significant tax savings. Please read through the general information below and let us know if you would like us to look at the specifics of your tax situation.

1. What is it?

The Oregon Pass-Through Entity – Elective Tax (PTE-E) allows partners and shareholders of passthrough entities to pay and deduct their personal state income taxes through their businesses for tax years 2022 and 2023.

2. Why does it matter?

The Tax Cuts and Jobs Act of 2017 imposed a $10,000 cap on the State and Local Tax deduction for individuals. Any amounts paid for certain items including state income taxes and local property taxes exceeding that threshold are nondeductible. Under the new PTE-E, those amounts can be fully deducted at the business level.

3. Who does it apply to?

Partnerships, S Corporations, and LLCs electing to be taxed as partnerships or S Corporations may elect into the PTE-E tax if all owners consent and are individuals. Sole proprietorships and single member LLCs are excluded.

4. What do I need to do?

First, let us know that you’re interested in taking advantage of this option. We will help with estimates and prepare required forms with next year’s return. Businesses must register through Oregon Department of Revenue online and make estimated quarterly estimated payments. An additional form will need to be filed along with standard business and personal returns.

5. When do I need to do it?

Registration opens June 6, 2022 and the first estimated payment covering Q1 and Q2 is due by June 15, 2022.

6. What about the estimated payment vouchers I already made or plan to make?

If you already made an Oregon estimated payment toward your 2022 personal taxes, it will still be applied to next year’s tax liability. Future estimated payments need to be recalculated under the new rules and paid out of your business to claim a deduction.

7. Where can I find additional information?

Oregon Department of Revenue has a very helpful “Frequently Asked Questions” section available on their website.

This email is intended to provide a high-level summary of the more recent changes and updated guidance. As guidance may change, or the above may not be applicable to all situations, please contact us if you need assistance.