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ODT issues PTE filing tips

Written on May 1, 2020

OSCPA staff report

The Ohio Department of Taxation this week issued a brief list of tips and reminders for practitioners filing on behalf of pass-through entities.

The mostly routine tips come on the heels of revisions ODT made to the online instructions. The department is working to identify return errors, which will drive further fixes or reminder announcements.

The tips are:

  • When making payments (either before filing or accompanying a return), be sure to use the payment coupon (UPC) for the corresponding form (e.g. IT 4708, IT 1140 or IT 1041). Mixing UPC types and return types will lead to processing delays. (For example, making an IT 1140 ES estimated payment, then filing an IT 4708 tax return will create a delay.)
  • When completing your IT 1140, make sure your estimated payments are on the correct line. Use Schedule I line 3 and not lines to transfer the payments to/from the IT 4708 (3a & 3b). Using lines 3a & 3b for claiming estimated payments will delay processing your return.
  • When completing your IT 4708, make sure your estimated payments are on the correct line. Use Schedule I line 14 and not lines to transfer your payments to/from the IT 1140 (15 & 16). Using lines 15 & 16 will – you guessed it – delay processing your return.
  • When filing the IT 1140, do not include tax payments made by another entity on your behalf. These payments should instead be reported on an Ohio IT K-1. If you want credit for these amounts on a PTE return, you must file an IT 4708. If you claim these payments amounts on your IT 1140, they will be denied, and you will receive a bill for the subsequent tax due.
  • You must complete all schedules on the PTE return. Many schedules provide information that flows to another section of the return. Failure to complete the schedule containing source information for the relevant return line item will cause that line to “zero out” and your return to be recalculated accordingly. For example: The total from Schedule II of the IT 4708 flows to Schedule I, line 1.
  • Make sure your apportionment ratio and ownership percentage are correct and entered in all applicable fields. All percentages and ratios must be reported as a decimal number (e.g. “30.09%” must be reported as “.3009” on the returns). Additionally, do not put any text (e.g. null, etc.) in these fields. A 100% apportionment ratio or ownership percentage must be shown as 1.0000.
  • When filing an IT 1140, do not include the distributive share of income or expenses of any non-qualifying investors. These amounts do not need to be reported to Ohio. Any amounts included on the return will be subject to the applicable tax rate. For example: A C-Corporation’s distributive share of income should not be included on the IT 1140. If you include the C-Corp’s income, the system will automatically calculate tax due based on the income and the tax rate for the column in which it is included and generate a bill for the amount.