In 2020, New Jersey passed the Pass-through Business Alternative Income Tax Act that created a workaround to the $10,000 cap on state and local tax deductions imposed by the Tax Cuts and Jobs Act of 2017. To elect the business alternative income tax (BAIT) for the 2021 tax year, pass-through entities (PTEs) were required to make the election and file related forms and payments by March 15, 2022.
Now, the New Jersey Division of Taxation is extending this deadline to make it easier for more of the state’s S-corporations, partnerships and limited liability companies (with more than one member) to take advantage of this strategy for the 2021 tax year.
PTEs now have until June 15, 2022 to file the following:
- 2021 PTE Election
- 2021 PTE-100 Tax Return
- 2021 PTE-200-T Extension of Time to File
- 2021 Revocation Forms
- 2022 Estimated PTE Payments
This valuable entity-level tax between 5.675% and 10.9% allows members to receive a credit for all or part of the BAIT against their own personal state tax liability – effectively treating the state tax obligation as a business expense.
If you have not yet considered BAIT or were unable to meet the March 15 deadline, please contact your Grassi advisor or Michael Hochman, Partner and Co-Leader of the NJ Market, to learn if this option is the right tax strategy for your PTE.