Idaho State Tax Commission

Idaho State Tax Commission

Pass-Through Entity Guidance

A pass-through entity (PTE) includes partnerships, limited liability companies taxed as a partnership, S corporations, and trusts/estates. Income, losses, deductions, and credits typically flow through the entity and are taxed at the owner level, with the owner’s share of income or loss included on his or her individual income tax return. At the entity’s discretion, income for Idaho nonresident individuals can be included and taxes paid on the entity’s composite return. (See Idaho Code section 63-3006C.)

Forms/publications

Reporting requirements flowchart

The following chart will help determine the reporting requirements of a pass-through entity (PTE) and its pass-through owners (PTO).

More PTE information

The information below defines the reporting requirements for each pass-through owner type, with an emphasis on nonresident individuals. The pass-through entity (PTE) must include the following items with its business income tax return:

  • A completed Form PTE-12, Idaho Schedule for Pass-Through Owners, and
  • A Form ID K-1 for each pass-through owner, regardless of type

Resident and part-year resident individuals

These owners must report the income from the pass-through entity on their Idaho income tax returns. They can’t be included in a composite filing and aren’t subject to withholding.

  • Resident and part-year resident individual owner information must be included on the PTE-12. Enter 'R' in the Filing Code column.
  • The amount entered on Form 41S, line 40, or Form 65, line 38, of the pass-through entity’s return must match the total amount from Form PTE-12, column b.
    • The amount of Idaho distributable income reported for each owner on Form PTE-12 is not the amount reported on the owner’s Form ID K-1.
  • Complete Form ID K-1 for each owner, indicating the amount of distributive share of gross income on line d in the Questions Section. The distributive share of gross income is used to determine whether a nonresident or part-year resident individual, trust, or estate has a filing requirement in Idaho. It isn’t directly reported on the owner’s Idaho return. To calculate the Idaho taxable income, each owner must refer to the appropriate income tax return instructions.

Corporations, partnerships, trusts, and estates. Also nonresident individual owners with Idaho distributable income of less than $1,000

These owners must report the income from the pass-through entity on their Idaho returns if they have other reporting requirements. They aren’t included in a composite filing and aren’t subject to withholding.

  • The information for corporations, partnerships, trusts, estates, as well as for nonresident individuals with income of less than $1,000 must be included on the PTE-12. Enter 'N' in the Filing Code column.
  • The amount entered on Form 41S, line 40, or Form 65, line 38, of the pass-through entity’s return must match the total amount from Form PTE-12, column b.
    • The amount of Idaho distributable income reported for each owner on Form PTE-12 is not the amount reported on the owner’s Form ID K-1.
  • The amount entered on Form 66, line 5, of the pass-through entity’s return must match the sum of the total amounts from Form PTE-12, columns b, c, and e.
  • The amount entered on Form 66, line14, of the pass-through entity’s return must match the total amount from Form PTE-12, column e.
  • The amount entered on Form 66, line 15, of the pass-through entity’s return must match the total amount from Form PTE-12, column f.
  • Complete Form ID K-1 for each owner indicating on line d in the Questions Section whether the amount of distributive share of gross income is $2,500 or more. The distributive share of gross income is used to determine whether a nonresident or part-year resident individual, trust, or estate has a filing requirement in Idaho. It isn’t directly reported on the owner’s Idaho return. To calculate the Idaho taxable income, each owner must refer to the appropriate income tax return instructions.

Nonresident individual owners with Idaho distributable income of at least $1000

A pass-through entity has three options for its nonresident individual owners with Idaho distributable income of at least $1,000:

  • Option #1: Form PTE-NROA, Idaho Nonresident Owner Agreement
  • Option #2: Composite filing
  • Option #3: Withholding
Option #1: Form PTE-NROA

Form PTE-NROA, Idaho Nonresident Owner Agreement, is an agreement by the nonresident owner to file the required Idaho individual income tax return and pay the required taxes due. If the nonresident individual doesn’t file the return and pay the taxes due as required, the Tax Commission can assess the pass-through entity for the taxes due.

If the pass-through entity receives Form PTE-NROA for a nonresident individual owner and approves it, the entity doesn’t include the individual in a composite filing or pay withholding on Form PTE-01 to the Tax Commission on the owner’s behalf.

  • The nonresident individual owner’s information must be included on Form PTE-12. Enter 'A' for Owner Agreement in the Filing Code column.
  • The amount entered on Form 41S, line 40, or Form 65, line 38, of the pass-through entity’s return must match the total amount from Form PTE-12, column b.
    • The amount of Idaho distributable income reported for each owner on Form PTE-12 is not the amount reported on the owner’s Form ID K-1.
  • The Form ID K-1 for nonresident individuals using Form PTE-NROA won’t include tax paid by the entity or withheld on lines e or f in the Questions section, but will indicate on line d if the amount of distributive share of gross income is $2,500 or more. The distributive share of gross income is used to determine if a nonresident individual has a filing requirement in Idaho. It isn’t directly reported on the owner’s Idaho return. To calculate the Idaho taxable income, each owner must refer to the appropriate income tax return instructions.
Option #2: Composite filing

Under the composite filing option, the pass-through entity pays the tax for the nonresident individual(s) on the entity return at the corporate tax rate (7.4%).

  • The nonresident individual’s information must be included on Form PTE-12. Enter 'C' for Composite Return Filing in the Filing Code column.
  • The amount entered on Form 41S, line 42, or Form 65, line 40, of the pass-through entity’s return must match the total amount of composite Idaho distributable income on Form PTE-12, column e.
    • The amount of Idaho distributable income reported for each owner on Form PTE-12 is not the amount reported on the owner’s Form ID K-1.
  • The amount entered on Form 41S, line 43, or Form 65, line 41, of the pass-through entity’s return must match the total amount of income tax paid by the entity on Form PTE-12, column f.
  • Complete the Questions section of Form ID K-1 for each nonresident individual owner indicating on line d if the amount of distributable share of gross income is $2,500 or more, and also indicating on line e the amount of tax paid. The distributive share of gross income is used to determine if a nonresident individual has a filing requirement in Idaho.
    • The amount of tax paid on line e must also be entered for each individual owner on the entity’s Form PTE-12 under column f (these amounts must match).

With this option, the entity return will show a tax due amount. The entity won’t use Form PTE-01, Idaho Income Tax Withheld for an Individual Nonresident Owner of a Pass-through Entity, as no withholding payment is being made.

Option #3: Withholding

The pass-through entity pays Idaho income tax withholding computed at the highest individual tax rate (7.4%) on the nonresident individual’s Idaho source distributable income from the pass-through entity.

  • The withholding is submitted to the Tax Commission using a Form PTE-01, Idaho Income Tax Withheld for an Individual Nonresident Owner of a Pass-through Entity, for each nonresident individual owner.
    • The withholding must be paid to the Tax Commission by the 15th day of the fourth month following the end of the tax year.
    • When an entity has a fiscal year end other than that of the owner, the credit passes through in the same period that the entity income or loss is reported by the owner for federal tax purposes.
    • Indicate the owner’s tax year in the “payment is for tax year” section of the PTE-01.
  • The nonresident individual’s information must be included on the PTE-12. Enter 'W' for Withholding in the Filing Code column.
  • The amount entered on Form 41S, line 41, or Form 65, line 39, of the pass-through entity’s return must match the amount from Form PTE-12, column c.
    • The amount of Idaho distributable income reported for each owner on Form PTE-12 is not the amount reported on the owner’s Form ID K-1.
  • Complete Form ID K-1 for each nonresident individual owner, indicating the amount of distributive share of gross income on line d and the amount of withholding paid on line f in the Questions section. The distributive share of gross income is used to determine if a nonresident individual has a filing requirement in Idaho. It isn’t directly reported on the owner’s Idaho return. To calculate the Idaho taxable income, each owner must refer to the appropriate income tax return instructions.
    • The amount of withholding paid on line f must also be entered for each individual owner on the entity’s Form PTE-12 under column d (these amounts must match).

Under this option, the entity return will not show a tax due amount or any estimated payments. A Form PTE-01 must be filed for each nonresident individual owner for whom withholding is being paid.

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Last updated March 10, 2015