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New York Department of Taxation and Finance Explains Implementation of New York City PTET
TSB-M-22(1)C, (1)I, N.Y. Dept. of Tax. & Fin. (10/11/22). The New York Department of Taxation and Finance (Department) issued a memorandum addressing the newly created New York City (City) pass-through entity tax (NYC PTET) [see previously issued Multistate Tax Alert for more details on original enactment of the NYC PTET earlier this year], which took effect beginning with tax year 2022 [see SB 9454, signed by gov. 8/31/22, and previously issued Multistate Tax Alert for more details on subsequent legislation which revised the NYC PTET’s effective date]. The Department explains that under new Tax Law Article 24-B, the NYC PTET is an optional tax that City partnerships or City resident New York S corporations that have elected to participate in the New York State pass-through entity tax (NYS PTET) may annually elect to pay on certain income for tax years beginning on or after January 1, 2022. If an eligible City partnership or eligible City resident New York S corporation elects to pay the NYC PTET (electing entity), partners, members, or shareholders who are subject to the New York City personal income tax under Article 30 may be eligible for a NYC PTET credit against New York City personal income taxes on their New York State income tax returns.
The memorandum addresses how and when to make such an election; how to calculate City pass-through entity taxable income; how to calculate the NYC PTET; making estimated tax payments for the NYC PTET; filing the annual PTET return and calculating the NYC PTET credit; and claiming the NYC PTET credit. The memorandum also explains that an eligible taxpayer claiming the NYC PTET credit must make an addition modification to federal adjusted gross income or federal taxable income on the eligible taxpayer’s New York State personal income tax return for an amount equal to the amount of the NYC PTET credit claimed.
See forthcoming Multistate Tax Alert for more details on this memorandum, and please contact us with any questions in the meantime.
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