Pass-Through Entity Tax Intake

Before You Begin: What You Should Know

What This Form Collects

This intake covers six steps: entity details, ownership and K-1 recipients, financial summary, distributions, balance sheet, and compliance disclosures. You do not need exact figures to get started. Estimates are acceptable for financial data — your CPA reconciles everything against your actual books. For ownership and entity information, use legal names and resident states. Full Social Security numbers, full EINs, dates of birth, and government ID are collected separately through our secure client portal once we begin the engagement — never through this form.

What Is a Pass-Through Entity?

S-Corporations, partnerships, LLCs taxed as partnerships, and LLPs are all pass-through entities. They do not pay federal income tax at the entity level. Instead, income, losses, deductions, and credits flow through to each owner's individual return in proportion to ownership. Each owner receives a Schedule K-1 reporting their share. The K-1 is then used to complete the owner's personal Form 1040. Accurate K-1 preparation requires complete ownership information — names, identification numbers, ownership percentages, and resident state for every owner.

S-Corporation Owners: Reasonable W-2 Compensation

S-Corporation shareholders who provide services to the entity must receive reasonable W-2 compensation. This is an IRS requirement, not a choice. W-2 wages are subject to payroll taxes; the remaining pass-through income is not. Step 2 of this intake asks for officer W-2 wages. If officer compensation has not been established or may be below a reasonable level for the services performed, note this in the Additional Notes section and your CPA will address it during the engagement.

The NJ BAIT Election — Why It Matters

New Jersey's Business Alternative Income Tax (BAIT) allows pass-through entities to pay New Jersey income tax at the entity level. The payment is fully deductible as a federal business expense. This is significant because the federal SALT deduction for individuals is capped at $10,000. By paying NJ tax at the entity level instead, owners effectively remove NJ business income from the SALT cap calculation — producing a federal deduction that individual owners cannot achieve on their own returns.

The election must be made annually and requires estimated payments through the year. Missing a quarterly BAIT payment reduces the net benefit. If you are unsure whether the BAIT election was made, select "Not Sure / Ask CPA" in Step 2. Your CPA will evaluate the election and any estimated payment catch-up options during the consultation.

Common Pass-Through Filing Mistakes We See

A few errors come up often enough that they're worth flagging before your engagement begins.

Late or skipped BAIT estimated payments. The NJ BAIT election requires four estimated payments through the year. Missing a payment doesn't cancel the election. It does cost a portion of the federal SALT-cap workaround. We catch missed payments at intake and outline a catch-up plan.

Officer compensation set too low. S-Corp owner-employees often pay themselves a token wage while taking large distributions. The IRS treats that pattern as an audit risk. We work with clients to document the wage analysis and adjust before the next quarter.

Untracked basis schedules. Partner and shareholder basis is reset every year by income, distributions, contributions, and losses. Many clients arrive with no basis schedule maintained. We rebuild it from prior K-1s before we can file accurately.

1099s never issued. Pass-through entities that paid contractors more than $600 are required to issue Form 1099-NEC. We check the prior year's books for missed 1099s during intake.

Missed S-election deadline for new entities. A new entity wanting current-year S-Corp status must file Form 2553 within 75 days of formation. Late elections can sometimes be cured under IRS Rev. Proc. 2013-30. The relief isn't guaranteed, and the cure process is more involved.

After You Submit

Your CPA team reviews this intake within one business day. You will receive a follow-up email or call to confirm the engagement scope, request any missing documents (prior year return, QuickBooks access, financial statements), and schedule a preparation timeline. K-1s are issued to all owners after the entity return is complete. Extensions are available if you need more time to gather financial data — just flag it in the Additional Notes section.