There are two important filing changes that we want to make all our business owners aware of as we enter 2024. First, is the new Beneficial Ownership Information Report (BOI). Second, is the new Pass-Through Entity Tax (PTET) for the State of Indiana.
The Financial Crimes Enforcement Network (FinCen), an Agency of the US Government tasked with monitoring the offshore ownership of US companies, has developed a new reporting requirement starting January 1, 2024. This is called Beneficial Ownership Information Report (BOI). This is not an income tax-related filing, but actually a legal filing. As such, we are not able to assist in the filing of this report. Both the American Institute of Certified Public Accountants and Indiana CPA Society have stated that firms like ours should not prepare or assist in the filing of the BOI report as it is deemed the practice of law. You can file the report yourself online starting January 1, 2024, at www.fincen.gov/boi. If you are not comfortable filing yourself, please seek legal counsel.
Indiana has joined 31 other states in adopting a Pass-Through Entity Tax (PTET) for S-Corporations and Partnerships. This will include LLCs that file as either an S-Corp or a Partnership. It will allow the entity to pay the shareholder or partner’s Indiana income tax at the business level and take a deduction on the entity’s federal tax return. For business owners, currently, the Indiana tax you pay personally is limited to $10,000 per year and you must itemize to use the taxes paid as a deduction. So, many of our business owners have not received a tax benefit for taxes paid to Indiana. With PTET, it ensures all business owners will receive a tax benefit for the state taxes they owe. This means that if your business has a net profit for 2023, on the Indiana business tax return, there will be a balance due.
We wanted to give you this information now, so when you receive your copies of the tax returns you know to open the package right away. Please don’t file them away immediately, but instead, open them and follow the payment instructions that will be included. We will also be reminding you when we send the electronic filing forms but we wanted to give you a heads up early.
