Dear Clients, Business Associates and Friends,
NYS has implemented the pass-through entity tax for eligible partnerships and S-Corporations.
This is an optional tax beginning on or after January 1, 2021.
The PTET tax will allow partnerships and S-Corporations to write off their NYS entity income tax return on their federal returns, lowering taxable income. Partners and Shareholders will then get a pass-through credit on their respective K-1’s to use on their individual income tax returns.
With the $10,000 tax deduction limitation on the federal return, this option would increase the NYS income tax deduction which would be paid by the entity.
Points to consider:
- This is an optional tax
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It is an irrevocable annual election
- Effective 1/1/2022 the eligible entities will have to make estimated tax payments for the PTET
- For 2021, you will have to make the payment in December in order to benefit for the current tax year (we would estimate your income to get the proper deduction)
- For 2021, you need to OPT in by 10/15/2021
- The sign up is done through the entity’s Business Online Service account – if you do not have one, you will need to register for one or we can do it for you.
- For the 2022 tax year, the election must be made online by 3/15/22
- The PTET tax is 6.85% for those entities with taxable income of $2 million or less – greater than $2 million there are calculations.
We believe this election will be a benefit to most NY Taxpayers
The Taxpayer will need to set up a NYS Business Online Service account if you don't already have one. Once the account is established please provide us with the log in information and we will make the election on your behalf. Click here for instructions to set up a NYS Online Business Account.
If this is something you are interested in taking advantage of, please click the following link PTET ELECTION or contact Lisa Treglia in our office at Lisa@TbrownCPA.com with any questions by October 1, 2021 so that we can make the election on your behalf.
