There has been much anticipation for the release of the New Jersey Business Alternative Tax forms. The NJ Division of Taxation issued additional guidance that the PTE-100 form will become available on Monday, March 8th. The state has also expressed that any payments being made for returns due March 15th on or before 11:59 p.m. April 1, 2021, will not be subject to penalty.
New Jersey business pass-through entity taxpayers have the option to file form PTE-200-T extension of time to file and pay by the same April 1, 2021 due date. Extensions can be filed and paid directly on the New Jersey Division of Taxation website or through your respective tax program.
The NJ BAIT tax will be reported on a separate schedule called PTE K-1 Member’s Share of Tax Schedule. On the bottom of the form is a box for the member’s share of business alternative business income tax, which should be reported on the business owner’s New Jersey personal return as a credit to offset any New Jersey tax liability.
As a reminder: The NJ BAIT allows New Jersey business owners the opportunity to elect to pay an income tax from their pass-through business entities. Businesses structured as Partnerships and S-Corporations are pass-through entities and eligible for this election. The Internal Revenue Service has confirmed they will honor such payments made as deductions on the businesses’ federal tax returns. Owners of the pass-through entities can then take credit for the taxes paid via their business entity on their New Jersey personal tax return. The NJ BAIT was implemented to help business owners lessen the negative impact of the federal state and local tax (SALT) limitation enacted in 2018.
Stay tuned for any further updates from the state.
Kevin Kanouse, CPA