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What Is New York State Tax

New York Update On Extension Of Filing Deadline

New York State Tax Basics – 100000 Gross Income

The New York Department of Taxation and Finance has issued a notice alerting taxpayers that the 2020 individual tax returns and related payments are now due on May 17, 2021. The Department emphasizes that the extension is for individual personal income tax returns only. However, estimated tax payments for 2021 have not been extended and are still due on April 15, 2021.

Corporate Franchise Tax Rate Changes

Under Article 9A of New York tax law, taxpayers are required to compute tax under three alternative basesâan income tax imposed on entire net income, a tax imposed on business capital, and a fixed-dollar minimum tax. A taxpayer pays tax based on whatever computation yields the highest amount of tax.

For Article 9A corporate franchise tax purposes, the bills adopt two rate changes.

  • For tax years beginning on or after January 1, 2021, and before January 1, 2024, the rate applicable to entire net income increases from 6.5% to 7.25% if the taxpayerâs business income base exceeds $5 million.
  • The rate increase is structured as a âcliffâ rate, rather than a graduated rate, so that all income is subject to the 7.25% rate if the $5 million income base is exceeded.
  • The $5 million âbusiness income baseâ amount referred to in the bills is a reference to the post-apportioned net income subject to tax in New York.

When Did You Suppose To Pay Mansion Tax

In a literal sense, the mansion tax shall be considered a real estate transfer tax. You can take a cue from the meaning as it is subject to payment attached with a Form TP-584. That means if you qualify for the criteria of a mansion tax, you have to pay it at the time of closing. If you are buying a property in NYC then the necessary filings are then typically submitted by the title company after closing.

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Do I Have To Pay New York State Income Tax

Generally, you have to file a New York state tax return if:

  • Youre a New York resident and youre required to file a federal tax return or your federal gross income plus New York additions was more than $4,000 .

  • Youre not a New York resident but got income from a source in New York during the tax year.

If youre not a resident of New York but your primary workplace is there, your days telecommuting during the pandemic are still considered days worked in New York unless your employer established an office at your telecommuting location. Generally, you will continue to owe New York State income tax on income earned while telecommuting.

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New York Property Taxes

Tax Rebate Checks Come Early This Year

New York has no tax on personal property, such as vehicles and jewelry, but there are property taxes on real estate. These taxes are paid to local governments such as counties, cities, and school districts.

The state does not take a cut of these revenues. All property tax revenues go directly to the localities for their:

  • Schools
  • Road maintenance
  • Other local services

Under state law, most counties and municipalities must assess property taxes at a uniform percentage of value. Without accounting for exemptions, properties of equal value in the same community should pay the same amount in property taxes. The owners of more valuable properties should pay more in taxes than the owner of less valuable properties.

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Itemized Deductions And Tax Credits

Most federal itemized deductions are allowed on New York returns. Deductions are available for college tuition and for contributions to the New York 529 plan.

Several tax credits are available for expenses such as child and dependent care costs. The state has its own version of the earned income credit.

Corporation Tax Changes In 2019 Budget

This summary highlights the corporation tax changes that were part of the 2019- 2020 New York State budget. Most notably, several tax law provisions were amended, including the contributions to the capital of a corporation, entire net income for stock life insurance companies, and unrelated business taxable income. Additionally, electronic filing and payment mandates have been extended through December 31, 2024, and the tax shelter penalty and reporting requirements have been extended through July 1, 2024.

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Tax Measures Not Included In The Budget Bills

Several controversial items that were widely discussed in the national press, but not included in the budget bills are:

  • The revitalization of the essentially dormant New York State Stock Transfer Tax
  • A new broad tax on financial transactions
  • An expansion of the mortgage-recording tax to capture real property security interests relative to mezzanine debt and private equity investments
  • Imposition of tax on individuals with second homes in New York
  • A provision that would have ended the ability of federal S corporations to be non-electing New York State C corporations

The governorâs budget proposal would have allowed the New York Tax Appeals Tribunal to appeal taxpayer favorable rulings. This also was not included in the final bills.

For more information, contact a KPMG State and Local Tax professional:

Sales And Other Taxes

New York State Enhanced Fill-in Tax Forms

The state’s sales tax has been set at 4% since June 1, 2005, but local municipalities can add up to 8.88%. Food, prescription drugs, and non-prescription drugs are exempt, as are clothing and footwear costing less than $110 per item.

The state imposes a motor fuel tax that includes a:

  • Motor fuel excise tax
  • Petroleum business tax
  • Petroleum testing fee

The state gasoline tax was 32.98 cents a gallon as of February 2021 state and federal taxes together are 51.38 cents per gallon. The cigarette tax is $4.35 per pack of 20.

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New York State Estate Tax

New York is one of the 14 states that charges taxes on the estates of the deceased, with rates ranging from 3.06 percent to 16 percent on any estates that exceed the basic exclusion amount, which is $5.25 million through the end of 2018. If an estate does exceed the BEA, it pays taxes at these tiered rates.

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And if the New York State Department of Taxation and Finance wasnt already making things complicated enough with different brackets, New York states estate tax is also unique for what is commonly referred to as the estate tax cliff.

The estate tax at the federal level has a basic exclusion amount of $11.18 million, and you only pay taxes on your taxable estate, which is the portion of your estate thats over that value. The New York estate tax, though, taxes the entire value of the estate for any estate that clears the BEA. So, while an estate worth $5 million would owe nothing, an estate worth $5.5 million would owe a whopping $450,000 hence the cliff for estates that are right at or near the BEA.

The state of New York does not levy an inheritance tax.

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New York City Musical And Theatrical Production Tax Credit For Corporate And Personal Income Tax

On July 23, 2021, Governor Andrew Cuomo announced the New York City Musical and Theatrical production tax credit which is designed to revitalize the theater district after its close due to the Covid-19 pandemic by offering up to $100 million in tax credits. The two-year program for approved companies which will allow tax credits for up to 25% of qualified production expenditures such as sets, costumes, sound, lighting, salaries, fees, advertising costs, etc. First year program applicants can receive up to $3 million per production and second year applicants up to $1.5 million. Companies can receive credits for tax years beginning on or after January 1, 2021 but before January 1, 2024. Applications must be submitted by December 31, 2022 and final applications no later than 90 days after the production closes or 90 days following the program end date of March 31, 2023, whichever comes first.

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Earned Income Tax Credit

You can claim the earned income tax credit in New York if you have a qualifying child and can also claim the federal earned income tax credit. You are not entitled to this credit if you claimed the Noncustodial Parent New York State Earned Income Tax Credit . The credit equals to 30% of your allowable federal earned income tax credit minus your household credit.

New York Finalizing $212 Billion Dollar Budget Deal

NYC Effective Tax Rates

On April 6, 2021, Governor Andrew Cuomo announced an agreement has been reached on the $212 billion budget for the fiscal 2022 year. Included in the budget is New Yorks own version of a workaround to the federal limitation of the state and local tax deduction. The Tax Cut and Jobs Act imposed a $10,000 limitation on the amount of state and local tax that individuals may deduct for federal income tax. Some states, including New Jersey and Connecticut, responded by enacting various workaround bills in an effort to mitigate the impact of the limitation on their state residents. Similarly, New York is planning to impose an entity level tax that would provide a offset credit to the individuals of the flow-through entity to get around the $10,000 limitation.

A brief overview of some other items included in the budget bill include the following:

  • The corporate franchise tax rate would temporarily be raised to 7.25% from 6.5% for three years.
  • For tax years beginning on or after January 1, 2021, and prior to January 1, 2024, the business capital tax base is reinstated
  • The capital base tax was supposed to be fully phased out beginning January, 1, 2021.
  • As part of the phase out, the tax rate for the capital base tax had been reduced each year 0.075% for 2018 0.050% for 2019 0.025% for 2020).
  • Going forward, the capital base tax will be imposed at a rate of 0.1875%, and therefore this reinstatement also comes with a rate increase.

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New York Is Casting A Much Bigger Net Fishing For Remote Taxpayers Under The Office Of Convenience Rule

In recent months, New York has started issuing desk audit notices , basically as soon as returns are filed, to taxpayers who have claimed a change of residency or who have reported less income attributable to New York sources than in prior years. New York is issuing desk audit notices, assigning taxpayers case numbers, and requiring a response. Failure to respond promptly with sufficient information will result in an assessment of additional tax along with associated penalties and interest.

Taxpayers receiving these notices related to a reduction in income allocated to New York State will be required to prove that any days allocated outside of New York were for their employers necessity to the Departments satisfaction. The Department will assess additional tax under the Office of Convenience Rule if the taxpayer is unable to substantiate to the Departments satisfaction that the days worked outside New York was not for the individuals convenience. Please note that the Department is taking the position that any day worked from home due to COVID is for the employees convenience and not the employers necessity.

Taxpayers receiving notices related to a claimed residence change will be required to prove to the Departments satisfaction that they:

  • Broke their New York domicile
  • Are not statutory residents and,
  • New York Income Taxes

    New York States top marginal income tax rate of 8.82% is one of the highest in the country, but very few taxpayers pay that amount. The state applies taxes progressively , with higher earners paying higher rates. For your 2020 taxes , only individuals making more than $1,077,550 pay the top rate, and earners in the next bracket pay nearly 2% less. Joint filers face the same rates, with brackets approximately double those of single filers. For example, the upper limit of the first bracket goes up from $8,500 to to $17,150 if youre married and filing jointly.

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    We Have Received Your Return And It Is Being Processed No Further Information Is Available At This Time

    This is a general processing status. Unless your return is selected for additional review, or we request additional information, this will be your status throughout processing until we schedule an issue date and update your status at that time. While your return is in this stage, our Call Center representatives have no further information available to assist you. As your refund status changes, this message will automatically update in our automated phone system, our online Check your refund status application, and in the account information available to our representatives.

    Services Subject To Tax In New York City

    NYS Sales Taxable Goods and Services

    New York City collects sales tax on certain services that the state doesnt tax. Examples include beautician services, barbering, tanning and massage services. The city also charges sales tax at health and fitness clubs, gymnasiums, saunas and similar facilities. If youre trying to improve your credit, keep in mind that New York City charges sales tax on most credit reporting services.

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    New York State Tax Information

    All CBA Travel account purchases IBA Travel account meal & incidental purchases
    All CBA Purchase account purchases GSA SmartPay Tax Advantage Travel Card account meal & incidental purchases
    IBA Travel account lodging & rental car purchases
    GSA SmartPay Tax Advantage Travel Card account lodging & rental car purchases

    Do I need a form?Yes.

    Note: Form ST-129 cannot be used to claim exemption from locally imposed and administered hotel occupancy taxes, also known as local bed taxes. When presenting the certificate you must also provide Government ID. Government entities are not allowed to use Form ST-119.1 for tax exemption. Only use Form ST-129 to qualify for exemptions. For confirmation of exemption to sellers for purchases please contact 457-2782.

    Who do I contact if I have a question?New York Department of Taxation and Finance: Sales Tax Information Center: 485-2889Important links:

    Best Practice: Before booking your hotel, call ahead to verify state tax law compliance. If your hotel does not comply with state tax law, it is recommended that you chose an alternate hotel.

    Amazon Tax Exemption Program Items purchased through LLC, or its subsidiaries and shipped to this state are subject to tax. However, the Federal Government may receive tax exemption in these states by Enrolling in the Amazon Tax Exemption Program .

    *Updated 12/9/19

    Explore Our Financial Education Program

    The Financial Education Program is a series of short modules and videos designed to take you through the benefits available to you and the responsibilities you have as a New York State taxpayer. You can start anywhere in the series or review all the modules. This is for youlet us know what you think!

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    New York State Income Tax

    New York State income tax rates range from 4% to 10.90%% for the 2021 tax year, depending on a taxpayer’s income.

    The lowest rate of 4% applies to the first $8,500 of taxable income for single filers and the first $17,150 for taxpayers who are married filing jointly. The tax rate then increases incrementally based on income.

    The highest rate of 10.90% is applicable to incomes exceeding $25 million for taxpayers who file as single, head of household, or married filing jointly.

    Government pensions and pensions from certain government authorities, including Social Security, are exempt from income tax in New York.

    Where Does New York Sales Tax Go

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    For the last full fiscal year, the state of New York collected $15.2 billion in sales taxes, which comprised about a fifth of its total tax revenue but just a third of what was collected from state income taxes. That money goes toward covering the nearly $100 billion in State Operating Funds spent each year.

    In the city of New York, sales taxes also pay for a smaller but important share of the citys total budget. The 8.66 percent of the citys income coming from sales tax is the fifth-largest source of funding behind federal grants , income tax , state grants and property taxes . Thats all a part of the approximately $82 billion in tax revenue collected by the city against expenditures of just over $85 billion.

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    Schedule A Tax Allocation Consultation With The Attorneys At Hodgson Russ Llp

    In today’s world, many taxpayers lead complex lives and may travel to multiple states as part of business, family obligations and other experiences. If you are subject to a New York State nonresident audit or have questions about residency or nonresidency issues, contact the attorneys at Hodgson Russ LLP for a consultation.

    Overview Of New Yorks Nonresident Taxation

    The tax computation for New York residents is simple. Residents are taxable on one thing: Everything. Nonresidents, however, can be taxed only on income that is derived from or connected to New York sources. That isnt just because New York likes to treat nonresidents more favorably. Under the U.S. Constitution, a state may not tax a nonresidents income unless it has some connection with the state. So the focus in nonresident allocation cases is usually on one thing whether the taxpayers income was derived from or connected to New York sources. Generally, under Tax Law section 631, the New York-source income of a nonresident individual includes all items of income, gain, loss, and deduction entering into the taxpayers federal adjusted gross income that are attributed to the ownership of any interest in real or tangible property located in New York or a business, trade, profession, or occupation carried on in New York.

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