Refresher on NEW YORK STATE RESIDENT INCOME TAX

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Refresher on NEW YORK STATE RESIDENT INCOME TAX

• Computation of Taxable Income
• New York State Credits
• Sales Tax, Star Rebates
• TaxWise Tips
• E-filing NYS
• Based on NY-3 Training slides
• Edited for NY-4 Geneva workshop

November 2008 Geneva Instructors Workshop
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NEW YORK STATE TAX RETURNS

• This presentation applies to full-year resident
  tax returns.
• REF. NYS PUB 80 IT-201 INSTRUCTIONS

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NYS FILING REQUIREMENTS

• You must file a NYS return if you
• Are required to file a federal return, or
• If your Federal AGI plus NYS additions is 4,000
  or more, or
• You WANT to claim a REFUND or CREDIT
• 3,000 if claimed as a dependent

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NEW YORK STATE INCOME TAX FLOW

• Based on Federal Return
• Federal AGI plus NYS Additions minus NYS
  Subtractions NYS AGI
• NYS AGI minus Deductions minus Exemptions
  Taxable Income
• Taxable Income -gt (tax tables) -gt Tax on Income
• Tax - non-refundable credits designated
  contributions sales tax Total tax (not less
  than zero)
• Total Tax refundable credits payments Tax
  due or refund

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Common Additions

• Mandatory contributions to state 414H retirement
  plan
• (Coded as 414HSUB in box 14 of W2)
• Interest on non-NY municipal bonds or funds

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Common Retirement Subtractions

• Retirement distributions received after age
  59-1/2 from Private Pensions, non-NY government
  pensions, IRAs or other qualified plans. -
  20,000 maximum exclusion per Taxpayer
• Retirement distributions from Federal, New York
  State, and Local Government Pensions no limit
• Railroad retirement pension no limit
• Social Security Income no limit

NY-3 NYS TRAINING - 2008
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Other common subtractions

• Income tax refunds included as income
• Interest on Treasury Debt Instruments no limit
• Contributions to NYS 529 college savings plan
  (5000 max 10,000 MFJ)

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Qualified Retirement Income

• To qualify for the exclusion, the income must be
  based on employment
• Pension, IRA, 401(k), 403(b), 457
• Commercial annuities funded from savings are not
  qualified
• If beneficiary, see special rules
• Age that deceased would have been
• Multiple beneficiaries also split the 20K limit

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PENSION INCOME EXCLUSION IN TAXWISE 1099R SCREEN

Check Box 1 For Private Pension
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PENSION INCOME EXCLUSION IN TAXWISE 1099R SCREEN
Check Box 2 For Public Pension
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PENSION INCOME EXCLUSION IN TAXWISE 1099R screen
Check Box 4 For RR Retirement
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Deductions and exemptions

• If taxpayer itemized on federal, may either
  itemize or take standard deduction on state
• Must adjust federal itemized number to subtract
  out any income tax deduction
• If taxpayer did not itemized on federal, must
  take standard deduction on state
• No personal exemptions
• Dependent exemptions are 1,000 each

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NYS STANDARD DEDUCTIONS

• 3,000
• 7,500
• 15,000
• 7,500
• 10,500
• 15,000

• SINGLE (Dependent)
• SINGLE
• MARRIED JOINT
• MARRIED SEPARATE
• HEAD HOUSEHOLD
• QUALIFYING WIDOW(ER)

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NY State Credits Is it really free money?

• Some credits are refundable
• Some credits are non-refundable
• Use it or loose it
• Use it or carry it forward
• Some credits offset others
• Some credits are for full-time residents only

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NY State Credits How do I do it?

• Some credits require separate forms
• Some credits require an IT-201-ATT
• Some credits may be filed alone
• Some credits may not be e-filed
• TaxWise limitations (e.g. IT-250)
• NYS limitations (e.g. IT-253)

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Review of selected NY Credits

• Credits most likely to be encountered by
  volunteer preparers not in NYC
• Listed in numerical form order

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IT-112RResident Credit

• Credit for taxes paid to another state, locality,
  or DC on income which is also taxed by New York.
• Form 112-C is equivalent for Canada
• Non-refundable
• Training required at local level for nearby
  states to be in scope

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IT-201 (line 40)Household Credit

• Non-refundable credit based on AGI, filing
  status, and size of household
• Automatically calculated or use table in
  instructions

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IT-209Non-custodial Earned Income Credit

• Special EIC for a parent who ...
• Doesnt get the regular EIC because their child
  does not live with them, and
• Is being forced to pay child support through a
  Support Collection Unit, and
• Is current on the payments
• NYS Office of Temporary and Disability
  Assistance will automatically certify to NYS
  Income Tax

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Non-custodial Earned Income Credit(continued)

• Qualifications similar to EIC plus ...
• Ordered to pay Child Support through a support
  collection unit
• For at least ½ year
• Must be up-to-date
• Taxpayer at least 18 yrs of age
• Qualifying Child Must be under 18
• Qualifying child cannot have lived with taxpayer
• Additional Credit available to NYC taxpayers

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Non-custodial Earned Income Credit(continued)

• Credit is
• 20 of Fed EIC that would have been allowed if
  the child lived with you, or
• 25 of Fed EIC allowed for no Qualifying
  children, whichever is greater
• Refundable credit

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IT-213Empire State Child Credit

• NY version of the federal child credit
• Full Year Resident NYS
• Must have Federal Child Tax Credit
• NYS Qualifying Child, Age 4-16
• Refundable credit is greater of
• 33 of Fed Credit for NYS Qualifying child
• 100 per Qualifying Child

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IT-214REAL PROPERTY TAX CREDIT

• Refundable Credit
• Available to owners or renters
• Property Must Be Subject to Real Estate Tax
• Household income L/E 18,000

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Household IncomeCriteria

• Household income must be lt 18,000
• Includes everyone living in household
• Includes cash welfare, grants, etc
• Includes non-taxable portion of pensions, IRAs,
  etc
• Includes social security less Medicare deductions

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HOUSEHOLD INCOME TEST
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Credit for renters
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Credit for owners

• FMV of property must not exceed 85,000
• Credit is based on property taxes paid, or
  optionally based on taxes paid plus property
  taxes not paid due to senior exemption

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Credit for owners

• Calculate with and without Exemption And Use
  Larger Credit

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Calculating the taxes not paid

• For each tax ...
• Calculate the reduction in assessed value due to
  senior exemption for that tax type
• Multiply reduction by tax rate
• Following example shows a simple case

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Example part 1

• Full Market Value 75,551
• Assessed Value 30,500
• Aged CTS 6,125 (20)
• Sr STAR 20,190 (66)

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Example part 2 (town)

• Assessed Value 30,500
• Aged CTS Exemption 6,125
• Town Taxable Value 24,375
• Town Tax Rate 23.17 per 1000
• Town Tax Exempted for 65 Yr Old
  6,12523.17/1000141.92

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Example part 3 (fire)

• Assessed Value 30,500
• Aged CTS Exemption 6,125
• Fire Dist Taxable Value 30,500
• Fire Dist Tax Rate 5.53 per 1000
• Fire Dist Tax Exempted 0.005.53/10000.00

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Example - summary

• Town Tax Paid (inc fire) 734
• School Tax Paid (?) 230
• Total Tax Paid 964
• Town Tax Exempted 142
• School Tax Exempted (?) 330
• Total Tax Exempted 472

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OWNERS CREDIT

• Credit with exemption 179
• Credit without exemption 122

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Beware of multiple exemptions
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And sometimes it doesnt matter because the
credit is limited
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IT-215Earned Income Credit (regular)

• Form IT-215
• 30 OF FEDERAL CREDIT
• Automatic in Taxwise
• Additional Credit available to NYC taxpayers
• Refundable Credit

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IT-216Child and Dependent Care

• Flows from information on Federal form 2441
• Credit is 20 to 110 of potential federal credit
• New York Credit is refundable
• Make sure IT-216 is present even if Federal 2441
  is not.

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IT-245Volunteer Firefighter and Ambulance Worker
Credit

• Refundable credit
• Full year residents only
• 200 per volunteer
• 400 if MFJ and both volunteer
• Must be active for entire year
• Cannot claim credit if
• Real Property Tax Exemption for volunteer service

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IT-249Long Term Care Insurance Credit

• Credit of 20 of actual cost of long term care
  insurance
• Cost is not limited by federal caps
• Credit is non-refundable, but may be carried
  forward if not used
• TaxWise will calculate automatically if premiums
  are entered using 1040 Schedule A detail worksheet

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1040 Schedule A Detail Worksheet

Total LT Care Ins Cost
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IT-250External Defibrillator Credit

• Non-refundable Credit
• Credit Cost up to 500/unit
• Multiple Purchases Allowed,
• but not for resale.
• Problem TaxWise does not have form IT-250

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IT-250External Defibrillator Credit

• Taxwise no Form IT-250
• Go to IT-201A, Section B
• Enter code 250 and correct amount.
• Program takes it from there.

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Dont do this !
Defibrillator Cost
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How to file an IT-250

• Find an IT-250 form somewhere
• Fill it in manually
• Put the credit number and cost on the correct
  line of the IT-201-ATT
• Print out the NY return (dont forget IT-2 and
  IT-1099-R if needed)
• Mail it in

November 2008 Geneva Instructors Workshop
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IT-258Nursing Home Assessment Credit

• Refundable Credit for Assessment charged to
  Nursing Home by state passed on to resident
• Must be separately stated on bill to resident
• Must be paid out-of-pocket
• Credit goes to person or persons who paid charge

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IT-272College Tuition Credit

• Refundable credit or itemized deduction for
  qualified undergraduate tuition and fees (10K
  per student max)
• Does not have to be full time
• Does not have to be degree program
• Taxpayer, spouse or dependent

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TaxWise tip - HOPE names carry, Lifetime do not
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Tuition Credit Option

• Credit based on total qualified expenses for all
  students (10K max each)
• Expenses less than 200 - full credit
• Expenses between 200 and 5,000 - 200 credit
• Expenses over 5,000 4 credit (400 max)

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Tuition Itemized Deduction Option

• Allows tuition to be deducted on NYS form
• Must have itemized on federal return
• May deduct qualified expenses for all students
  (10K total max)
• Which is better credit or deduction ??

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TaxWise to the rescue!
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This and that ...

• Help!
• Star Rebates
• Sales Tax
• TaxWise Tips
• NY E-filing (bye-bye PINs)

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NYS HELP ( F1 on any NY form)
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STAR REBATENo 1099-G will be issued

• Is the STAR rebate amount taxable?
• Generally no.
• If Taxpayer itemizes Deductions and claims
  property taxes paid, must deduct STAR rebate from
  this deduction
• Same for enhanced standard deduction
• Rebate greater than property taxes, must show
  difference as Other Income.

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New York State Local Sales Tax

• NYS Sales Tax is owed if property or service is
  purchased and delivered into NYS without payment
  of sales or use Tax
• Purchases may be in person or via the internet,
  catalog, television shopping channels, mail
  order, etc.

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Federal to New York State TaxWise data flow

• Most data carries from Federal to NYS
• All Federal Income Lines
• All Federal Adjustments
• Itemized Deductions
• NYS Itemized deductions based on Fed
• Some credits are Automatic Carryover

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USING NY TAX WISE

• Must enter on NYS tax form
• County of Residence
• School District Name
• School District Code
• Residency or Presence of Living Quarters in NYC
• Complete lines E and F IT-201, pg 1
• If resident of NYC, Taxwise will calculate NYC
  income tax

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USING TAX WISEMust enter on NYS tax form
School District Name
County of Residence
School District Code
NY-3 NYS TRAINING - 2008
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SCHOOL TAX CODES
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USING TAX WISEMust enter on NYS tax form
Residency or Presence of Living Quarters in NYC
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IT-201, PAGE 1 NYC RESIDENCE
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Changes to NY e-file

• From Pub 84 (issued Nov 6, 2008) ...
• Taxpayer PIN, Spouse PIN and ERO PIN have been
  eliminated. Instead, New York State is using new
  e-file Signature Declaration Check Boxes.
• The TR-579 and TR-579.1 have been revised to
  reflect the above changes.

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New TR-579 (top)
No DCN or SSNs
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New TR-579 (bottom)
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• AARP procedures for completing and processing
  TR-579 to be provided

November 2008 Geneva Instructors Workshop