Instructions for 2023 Schedule ET-OS 
 
 GENERAL INSTRUCTIONS 
 
 Purpose of Schedule ET-OS 

 Schedule ET-OS is used by a partnership or a tax-option (S) corporation electing under sec. 71.21 (6) (a) 
 or 71.365 (4m) (a), Wis. Stats., to be taxed at the entity level to compute the credit for net income tax 
 paid to another state. 
 
 Additional information about this credit is in Publication 125, Credit for Tax Paid to Another State. 
 
 Who is Eligible for the Credit? 
 
 A partnership or tax-option (S) corporation that makes an election under sec. 71.21 (6) (a) or 71.365 (4m) 
 (a), Wis. Stats., may claim the credit. Partners of an electing partnership or shareholders of an electing 
 tax-option (S) corporation may not claim the credit for taxes paid by the partnership or tax-option (S) 
 corporation. 
 
 What Amounts are Eligible for the Credit? 
 
 •  An electing partnership or tax-option (S) corporation may compute the credit on a 2023 net income 
    or franchise tax paid by the entity to another state or the District of Columbia if the income taxed by 
    the other state is also taxable to Wisconsin. “State” does not include the Commonwealth of Puerto 
    Rico or the several territories organized by Congress. 

 •  An electing partnership or tax-option (S) corporation may also compute the credit on  2023  net 
    income tax paid  by the entity  to another state on  behalf of its Wisconsin resident partners or 
    shareholders on a composite income tax return filed with the other state. See Part B. 
 
 Limitations 

 The following limitations apply for 2023: 
 
 •  The credit cannot be claimed for net income tax paid on behalf of partners or shareholders that are 
    not residents of Wisconsin. 
 •  The credit cannot be claimed for any tax paid to a local unit of government that is not paid directly to 
    the state (such as a city, county, or school district) or for any tax that is not an income tax (such as a 
    severance tax, personal property tax, real estate tax, or sales and use tax). 
 •  The credit cannot be claimed for net income or franchise taxes paid to another state if the income 
    upon which the taxes were paid was also used to compute and claim the Wisconsin manufacturing 
    and agriculture credit. 

 •  The credit cannot be more than the amount of net tax paid by the partnership or tax-option (S) 
    corporation to Wisconsin on income that is taxable to both Wisconsin and the other state. This 
    limitation does not apply to income that is taxable to both Wisconsin and to  Minnesota, Iowa, 
    Illinois, or Michigan. 
 
 IC-113 (R. 11-23) 

                                 2023 Schedule ET-OS Instructions                                              
 
 Part-year resident partners or shareholders 
                                                               
 An electing partnership or tax-option (S) corporation may compute the credit on 2023 net income tax 
 paid by the entity to another state on behalf of its  part-year resident partners or shareholders on a 
 composite income tax return filed with the other state, but only on taxes paid on net income attributable 
 to the partner or shareholder for the portion of the year the partner or shareholder was a resident of 
 Wisconsin, and only if the income was taxable to both Wisconsin and the other state. 
 
 If Tax was Paid to More Than Two Other States 

 If the partnership  or  tax-option (S)  corporation paid  2023  net  income  tax on  the  same income  to 
 Wisconsin and to more than two other states: 
 
 1. Complete additional Schedules ET-OS, as needed, through line 20, 
 2. Add the amounts from line 20 from any additional Schedules ET-OS, and 
 3. Fill in the total on line 21 of the first Schedule ET-OS. 
 
 LINE INSTRUCTIONS 
 
 Part A – Calculation of Credit (Entity-level tax) 
 
 Fill in the 2 letter postal abbreviation for  the state to which tax was paid above line 1 in the space 
          ‑
 provided. Failure to fill in the postal abbreviation may result in the credit being denied or a delay in the 
 processing of the return. Note: Only use one column for each state to which you paid tax. For example, if 
 you paid the Illinois replacement tax and the Illinois pass-through entity (PTE) tax, use one column on 
 Schedule ET-OS. 
 
 Line 1 - Fill in the amount of income taxable to the other state that is also taxable to Wisconsin (for 
 example, ordinary income from trade or business activities, long-term capital gain, interest, etc.).  
  
 Notes:  
    •    If a manufacturing and agriculture credit is computed, do not include in the income taxable to 
         both Wisconsin and the other state the amount of qualified production activities income used to 
         compute the manufacturing and agriculture credit. 
    •    Income that is taxable to Wisconsin and the other state should not be included on line 1 if the 
         income is attributable to a nonresident of Wisconsin. 
 
 Line  2 -  For  each  state,  fill  in  the  amount  of  income  that  is  taxed by  the  other state. Note: If a 
 manufacturing and agriculture credit is computed, do not include in the total income taxed by the other 
 state the amount  of qualified production activities income used to compute the manufacturing and 
 agriculture credit. 
 
 Line 4 - For each column, from the income or franchise tax return of the other state, fill in the net tax 
 amount after any required proration and after subtracting all credits (both nonrefundable and refundable 
 credits). Include a copy of the other state's income or franchise tax return. Note: If a manufacturing and 
 agriculture credit is computed, do not include in the net tax paid to the other state the amount of tax paid 
 on the qualified production activities income used to compute the manufacturing and agriculture credit. 
 
 CAUTION Do not include tax withheld or estimated tax payments as a credit. 
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                                    2023 Schedule ET-OS Instructions                                       

 Part B – Calculation of Credit (Tax paid on behalf of Wisconsin resident members on a 
 composite return) 
                                                                                                           
 Line 6 - Fill in the amount of income taxable to the other state that is also taxable to Wisconsin for the 
 resident partner(s) or shareholder(s) (for example, ordinary income from trade or business activities, 
 long-term capital gain, interest, etc.). Note: If a manufacturing and agriculture credit is computed, do 
 not include  in  the  income  taxable  to both Wisconsin and the  other state  the  amount  of  qualified 
 production activities income used to compute the manufacturing and agriculture credit. Only reduce the 
 income by the amount of qualified production activities income allocated to the partners or shareholders 
 for whom the partnership or tax-option (S) corporation is paying tax on a composite income tax return 
 with the other state. 
 
 Line 7 - For each state, fill in the amount of income that is taxed by the other state before subtracting any 
 standard or itemized deductions or personal exemptions. Note: If a manufacturing and agriculture credit 
 is computed, do not  include  in the  total income  taxed by the other state  the amount of qualified 
 production activities income used to compute the manufacturing and agriculture credit. Only reduce the 
 income  by  the  amount  of  qualified  production  activities  income  allocated  to  the  partners  or 
 shareholders for whom the partnership or tax-option (S) corporation is paying  tax on a composite 
 income tax return with the other state. 
 
 Line 9 - For each column, from the income tax return of the other state, fill in the net tax amount after 
 any required proration and after subtracting all credits (both nonrefundable and refundable credits). 
 Include a copy of the other state's composite income tax return. Note: If a manufacturing and agriculture 
 credit is computed, do not include in the net tax paid to the other state the amount of tax paid on the 
 qualified production activities income used to compute the manufacturing and agriculture credit. Only 
 reduce the tax by  the amount of  tax paid on qualified production activities income allocated to the 
 partners or shareholders for whom the partnership  or tax-option (S) corporation is  paying tax on a 
 composite income tax return with the other state. 
 
 Part C – Credit Allowed 

 Line 11 - Fill in the amount of income taxable to both Wisconsin and the other state. This should include 
 amounts entered on lines 1 and 6, but do not include the same amount twice. 
 
 Example: The income which is taxable to another state for which the tax-option (S) corporation paid the 
 other state an individual income tax on a composite return and an income tax on a corporate return is as 
 follows (assume the tax paid to the other state on the composite income tax return is entirely for 
 Wisconsin resident shareholders): 
 
   Type of Income                   Composite Return                    Corporate Return 
   Ordinary income                  $40,000                             $20,000 
   Interest                                                             5,000 
 
 The tax-option (S) corporation paid an individual income tax on a composite return to the other state on 
 $40,000 of ordinary income of which the full amount is also taxable to Wisconsin. The entity paid an 
 income tax on a corporate tax return on a portion of this income. The entity also paid an income tax on a 
 corporate return to the other state on $5,000 of interest income of which the full amount is also taxable 
 to Wisconsin. The interest was exempt from taxation to the other state at the individual level. The amount 
 to enter on line 11 is $45,000 ($40,000 of ordinary income plus $5,000 of interest income). 

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         2023 Schedule ET-OS Instructions 

Include Schedule ET-OS with Schedule 3-ET or 5S-ET as appropriate. You must also include a copy of the 
partnership's or tax-option (S) corporation's income or franchise tax return(s) from the other state(s). If 
the entity is claiming credit for tax paid to other states on behalf of their partner(s) or shareholder(s) on 
a composite income tax return, include a copy of the composite income tax return from the other state. 

Caution: Processing of the return and any refund will be delayed if a copy of the return from the other 
state  is  not  submitted.  Failure  to  submit  these  items  will  require  the  department  to  contact  the 
partnership or  tax-option (S) corporation. 

         Applicable Laws and Rules 

This document provides statements or interpretations of the following laws and regulations enacted as 
of November 1, 2023: secs. 71.21 (6) and 71.365 (4m), Wis. Stats. 

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