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Tips to avoid common filing errors: pass-through entity tax (PTET)

For help filing an annual PTET return, review our tips, below. You may also want to review Frequently asked questions about PTET.

For guidance on PTET, including opting in and making estimated payments, see Pass-through entity tax (PTET). For step-by-step instructions on using our online PTET applications, see Instructions: PTET Web File applications.

For partners, members, and shareholders

  • Confirm your direct share of PTET (reported to you by the entity) is based on the tax the entity paid, not on the entity’s extension or estimated tax payments. Enter this amount on Form IT-653, Pass-Through Entity Tax Credit, to claim the PTET credit.
     
  • Include only taxes the entity paid on your behalf to a state with a tax substantially similar to New York State’s PTET in a claim for the resident credit (Form IT-112-R, New York State Resident Credit).

  • Do not claim your direct share of PTET as a New York subtraction modification; claim it separately, as a credit, then report it as a New York addition modification (see next tip).

  • On Form IT-225, New York State Modifications, add back the PTET credit as a New York addition modification with the modification code:
    • A-219 if you claimed the PTET credit on Form IT-653, or
    • A-220 if you claimed the resident credit on Form IT-112-R.

  • On Form IT-201, Resident Income Tax Return, Form IT-203, Nonresident or Part-Year Resident Income Tax Return, or Form IT-205, Fiduciary Income Tax Return, carry over the modification from Form IT-225.

  • Do not claim PTET paid to any jurisdiction as an itemized deduction for taxes paid. 

  • Do not report your share of PTET as an estimated tax payment on your income tax return.
     
  • If the PTET credit is allocated through an entity that is disregarded for tax purposes, such as a grantor trust, include the PTET entity's name and employer identification number (EIN) on Form IT-653 when claiming the PTET credit, not the disregarded entity's name and EIN.
       
  • If the PTET credit is allocated through a trust that is not disregarded for tax purposes, claim the PTET credit on the trust’s fiduciary income tax return (Form IT-205). The trust must not distribute any PTET credit it receives to its beneficiaries.

For entities

  • Web File an annual PTET return by March 15 (or September 15 if you have a valid extension of time to file) to:
    • report any tax due, and
    • allocate credit to your partners, members, or shareholders, but not beneficiaries.

If you do not file, the Tax Department:

    • cannot verify the amount allocated to any partners, members, or shareholders;
    • must disallow or adjust any partners, members, or shareholders PTET credit claims; and
    • may issue you a bill for tax, penalty, and interest due.
  • Confirm you are using the correct Social Security number for each partner (including foreign and nonresident), member, or shareholder when filing your annual PTET return. If the taxpayer doesn't have and isn't eligible for a Social Security number, they must contact the IRS to obtain an individual temporary identification number before requesting the credit.

Resources

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