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ProAxis Tax & Accounting Services

Pass-Through Entity Tax Intake

Form 1120-S — S-Corporation • Form 1065 — Partnership / LLC

This is a scoping intake — share what you'd like our CPA team to know before we prepare your entity return, K-1s, and evaluate the NJ BAIT election. We do not collect Social Security numbers, dates of birth, full EINs, or government ID through this form. Sensitive items are gathered through our secure client portal once we begin the engagement.

Before You Begin

Six quick steps: entity details, ownership and K-1 recipients, financials, distributions, balance sheet, and disclosures. Estimates are fine — your CPA reconciles everything against your actual books. We never collect Social Security numbers, full EINs, dates of birth, or government ID through this form.

What Is a Pass-Through Entity?

S-Corporations, partnerships, LLPs, and LLCs taxed as partnerships pay no federal income tax at the entity level. Income, losses, and deductions flow through to each owner's return on a Schedule K-1. Accurate K-1s require complete ownership information — legal names, percentages, and resident state for every owner.

S-Corp Owners: Reasonable W-2 Compensation

S-Corporation shareholders who work in the business must receive reasonable W-2 compensation. This is an IRS requirement, not a choice. Step 2 asks for officer W-2 wages. If officer pay may be below a reasonable level, note it in Additional Notes and your CPA will address it during the engagement.

The NJ BAIT Election — Why It Matters

The BAIT election lets a pass-through entity pay New Jersey income tax at the entity level, fully deductible as a federal business expense. That matters because the federal SALT deduction for individuals is capped — at $40,400 for 2026, phased down toward $10,000 for high earners. Paying NJ tax at the entity level produces a federal deduction individual owners cannot achieve on their own.

The election is annual and requires estimated payments through the year. Unsure whether it was made? Select "Not Sure / Ask CPA" in Step 2 and we will evaluate it with you.

Common Pass-Through Filing Mistakes We See
  • Late or skipped BAIT estimated payments — missing one doesn't cancel the election, but it costs part of the SALT-cap workaround. We outline a catch-up plan.
  • Officer compensation set too low — token wages plus large distributions is a pattern the IRS treats as an audit risk.
  • Untracked basis schedules — basis resets every year. We rebuild it from prior K-1s before filing.
  • 1099s never issued — contractor payments over $600 require Form 1099-NEC. We check the prior year's books.
  • Missed S-election deadline — Form 2553 is due no more than 2 months and 15 days after the beginning of the tax year the election is to take effect. For a calendar-year entity that is March 15. You can also file at any time during the preceding tax year. Late relief under Rev. Proc. 2013-30 may be available, but it has to be requested and is not automatic.

After You Submit

Your CPA team reviews this intake within one business day. We confirm scope and request missing documents — prior year return, QuickBooks access, financial statements. K-1s go to all owners once the entity return is complete. Need more time? Flag an extension in Additional Notes.

Pass-Through Tax: Common Questions

What is the filing deadline for an S-Corporation or partnership return?
Form 1120-S (S-Corp) and Form 1065 (partnership) are both due March 15 — one month before the individual deadline. A six-month extension to September 15 is available. Missing the March 15 deadline without an extension triggers a $255 per partner or shareholder per month penalty (tax year 2025 returns; up to 12 months), so filing or extending on time is critical.
What is the NJ BAIT election and should my entity elect it?
New Jersey's Business Alternative Income Tax (BAIT) allows pass-through entities to pay NJ income tax at the entity level instead of pushing it to owners' individual returns. Because the payment is a fully deductible federal business expense, it effectively bypasses the federal SALT cap ($40,400 for 2026, phased down toward $10,000 for high earners) — producing a federal deduction individual owners cannot achieve on their own. Most NJ pass-through entities with significant NJ income benefit from the election. If you are unsure, select 'Not Sure / Ask CPA' on the intake form and we will evaluate it during the engagement.
What is reasonable W-2 compensation for an S-Corp owner?
The IRS requires S-Corp shareholders who provide services to the entity to receive W-2 compensation comparable to what an arm's-length employer would pay for the same work. There is no fixed IRS formula — factors include industry, hours worked, and comparable market salaries. Underpaying officer compensation is one of the most common S-Corp audit triggers. We review officer compensation as part of every S-Corp engagement.
What documents should I have ready before submitting this intake?
Start with the intake form first — you do not need all documents to begin. Once submitted, your CPA will follow up and request: the prior year entity return (Form 1120-S or 1065), QuickBooks or accounting software access (or a year-end P&L and balance sheet), any IRS or state notices received, officer W-2s, and documentation of any major asset purchases or disposals during the year.
When will K-1s be issued to partners or shareholders?
K-1s are issued after the entity return is complete and accepted. For calendar-year entities filing by the March 15 deadline, K-1s typically go out in mid-to-late March. If the entity files an extension, K-1s follow after the September 15 extended deadline. Owners should not file their personal returns until they have received their K-1.
Can ProAxis prepare a multi-state pass-through return?
Yes. ProAxis regularly handles pass-through entities with operations, employees, or revenue in multiple states — particularly NJ, NY, CT, and PA. Multi-state returns require state apportionment analysis and composite return evaluation for out-of-state owners. Flag multi-state activity in Section 6 of this intake.
What happens if my K-1 arrives after my personal tax deadline?
If your entity filed an extension, K-1s arrive after September 15. That is well past the April 15 personal deadline. In that case every partner or shareholder must also extend their personal return to October 15. Filing your 1040 before the K-1 arrives means amending later, which is more work than simply extending. We coordinate entity and personal extensions together for clients with both engagements.
When should an LLC consider electing S-Corporation tax status?
S-Corp status saves self-employment tax once profits comfortably clear the cost of running payroll. The exact break-even varies by state, owner role, and what counts as a reasonable wage in your industry. The election also requires running payroll, filing Form 941 quarterly, and passing a reasonable-compensation review every year. We model the break-even for every client weighing the election. Outcomes vary; this is general information, not tax advice.
What S-Corp positions trigger IRS scrutiny most often?
The single biggest red flag is paying yourself a low W-2 wage while taking large distributions. Investment-only S-Corps that report no officer compensation also draw attention. Other triggers include big shifts between distributions and wages year over year. Listing officer time-devoted as 100% with no compensation is another common pattern auditors look for. We review every S-Corp return for these patterns before filing.

Why NJ Pass-Through Entities Choose ProAxis

S-Corp & Partnership Specialists

Form 1120-S, Form 1065, K-1 preparation, basis schedules, and entity-level tax strategy — all under one roof.

Business tax returns →

NJ BAIT Election Experts

We evaluate the BAIT election, estimated payment catch-up options, and SALT cap strategy for every eligible NJ entity.

NJ SALT consulting →

Fully Virtual, Tri-State Coverage

Secure document portals, video consultations, and CPA coverage for NJ, NY, PA, and multi-state entities.

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