The NYS Department of Taxation & Finance system is currently open. Now is the time to make your annual election to opt-in to the NY pass-through entity tax (PTET) for the 2022 tax year.
What is the NY PTET?
The New York PTET is a newly enacted provision that took effect in tax year 2021. It is an optional entity-level tax for flow-through entities. The tax is a workaround to the IRS State and Local Tax (SALT) limitation enacted in the 2017 Tax Cuts and Jobs Act. Taxes paid through the New York PTET are deductible for federal tax purposes and reduce flow-through income to owners of the electing entities. Owners receive an income tax credit on their New York K-1 to offset personal income taxes.
How Do I Elect the NY PTET?
Annual elections for the New York PTET need to be made through the entity’s New York State Online Service Account. The election must be made by March 15, 2022 for the 2022 tax year. This applies to both calendar year entities and fiscal year entities whose fiscal year ends in 2022. For example, an entity with a fiscal year of October 1, 2021 to September 30, 2022 will still have to make their election by March 15, 2022 for the 2022 PTET taxable year.
Do I Need to Make Estimated PTET Payments?
Beginning with the 2022 tax year, electing entities are required to pay estimated tax on the amount of PTET calculated based on the current taxable year. These quarterly payments are due on or before March 15, 2022; June 15, 2022; September 15, 2022; and December 15, 2022. These payments must be made electronically through the entity’s New York State Online Service Account.
Each quarterly payment should equal at least 25% of the annual payment, which is the lesser of:
- 90% of the PTET required to be shown on the entity’s return; or
- 100% of the PTET shown on the return of the electing entity for the preceding PTET taxable year.
If the entity did not participate in the 2021 NY PTET, for 2022 the electing entity must pay at least 90% of the current year’s NY PTET.
How Do I Web File My PTET Return?
PTET tax returns are due on March 15 of the following year for which the election applies. The returns are prepared and filed on a calendar-year basis. Follow these steps to web file:
- Log in to your New York State Online Service Account.
- Select the ≡ Services menu in the upper-left corner of your Account Summary homepage.
- Chose PTET web file from the Corporate tax or Partnership tax expanded menu, then select the web application you wish to launch.
If you have any questions about electing into the NY PTET or making your 2022 estimated tax payments, please contact your Grassi advisor or Jason Drucker, Senior Tax Manager.