For those taxpayers that elected to pay the NYS pass-through entity tax for 2021 (which was newly enacted for tax years starting in 2021) and may elect again for tax year 2022, some important compliance deadlines are coming up.  Although the state is still providing guidance regarding some items, please be aware of the deadlines below as you are working through your 2021/2022 taxes.

2021 TAX YEAR:

• Annual Filing:

For those eligible entities that opted into the PTET for 2021, the annual PTET return must be filed on or before March 15, 2022.  This filing must be done online through your Business online services account. The state provides PTET worksheets on its website for partnerships and S corporations to assist in calculating PTE taxable income (and the tax due).   An entity can request a 6 month extension of time to file the return however this is not an extension of time to pay any tax due.  If estimated tax payments were not made in 2021, the full amount of the tax liability will be due with the filing.

• PTET Credit:

An individual, trust or estate that is an eligible claimant will claim its credit using form IT-653 and attach to its NYS personal income tax return.  Note: A trust (other than a grantor trust) is allowed a PTET credit on the trust’s income tax return but it is not permitted to distribute this credit to the beneficiary.

Reminder: Any unused credit will be refunded or can be credited to the 2022 NYS tax liability.  No interest will be paid.  In order to receive the PTET credit, the electing entity must have PAID the PTET imposed and identify you on the PTET return filed.

Form IT-225, New York State Modifications will need to be filed with the personal income tax return as an addition modification to federal adjusted gross income is required in the amount of the PTET credit claimed.

• Resident Tax Credit:

A resident tax credit will be allowed against New York State personal income tax for any pass-through entity tax imposed by another state that is substantially similar to the PTET imposed by NYS.  States with a tax substantially similar to the NYS PTET are listed at https://www.tax.ny.gov/bus/ptet/substantially-similar.htm.

There is an addition modification required on Form IT-225 for the amount of the pass-through entity tax paid to the other state jurisdiction.

2022 TAX YEAR:

• Annual Election:

The 2022 PTET election period is now open and the election can be made for tax year 2022 using the PTET Annual Election application in the entity’s Business Online Services account.  This must be done no later than March 15, 2022.

• 2022 PTET Estimated tax payments:

The first 2022 PTET estimated tax payment is due March 15, 2022 (additional dates are June 15, September 15 and December 15).  Payments must be made online and paid by ACH debit (no check payments are allowed).  The required quarterly payment should be equal to 25% of the required annual payment for the tax year.  The required annual payment is the lesser of 90% of the current year estimated liability or 100% of the PTET shown on the prior year return. 

If you need assistance with the above or have further questions, please contact your tax advisor at Dermody, Burke & Brown.

The information reflected in this article was current at the time of publication. This information will not be modified or updated for any subsequent tax law changes, if any.