Back to the Future: Credit carryforwards return

Written on Jan 10, 2021

By Greg Saul, Esq., CAE, OSCPA tax policy director

Beginning with tax year 2017, the Ohio Department of Taxation announced that overpayments for composite, trust and non-resident PTE returns were going to be refunded to the taxpayer or qualifying entity. Therefore, credit balances were no longer carried forward to the next taxable period for IT 1140, 4708, and 1041. OSCPA opposed this move and worked with ODT to restore the prior practice. The Society is happy to announce that ODT has added to the 2020 PTE tax returns the option for taxpayers to complete a credit carryforward to tax year 2021.

Credit Carried Forward is Available for Tax Year 2020

The IT 1041, IT 1140 and IT 4708 will allow an overpayment reported on the Tax Year 2020 return to be carried forward as a payment toward the 2021 return.

  • The credit carryforward is only allowed on a timely filed original return.
  • For amended Tax Year 2020 returns, the credit carryforward is not allowed and will be refunded.
  • The credit carryforward is not allowed on Tax Years 2017-2019.

The Pass-Through Entity Tax forms (IT 4708, IT 1140, forms (IT 4708, IT 1140, and IT 1041)and IT 1041) for Tax Year 2020 are now available on ODT’s website. The PTE instruction booklets are also now available booklets are also now available for your reference in filing these returns that for most entities, trusts and estates are due by April 15, 2021.

The IRS began accepting business tax returns on Jan. 8. Because of system upgrades Ohio will not begin accepting tax year 2019 and prior year’s returns until Jan. 15 and tax year 2020 returns on Jan. 18.

The Ohio Pass-Through Entity returns may be submitted through approved software providers; however, they will remain in queue with the IRS to be downloaded and processed while preserving the received date of submission. Acknowledgements for returns received will be sent when Ohio resumes downloading and processing of returns.

If you have additional questions, please read ODT’s entire Pass-Through Entity & Fiduciary Income Tax Updates Entity & Fiduciary Income Pass-Through Entity & Fiduciary Income Tax Updates Entity & Fiduciary Income Tax Updates Updates notice, or email questions to PassThroughEntity@tax.state.oh.us.

 

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