How partners, members, and shareholders claim the pass-through entity tax (PTET) credit
Your PTET entity must provide you with a copy of Form IT-204-IP, New York Partner’s Schedule K-1, or an S corporation shareholder statement indicating your share of the PTET entity’s income, deductions, and credits, including the PTET credit.
Your PTET credit equals your direct share of the pass-through entity tax paid by your partnership or S corporation.
If you are a partner, member, or shareholder in multiple electing partnerships or electing S corporations subject to PTET, your credit will be the sum of the amounts reported to you from each entity in which you are direct partner, member, or shareholder.
To properly report your PTET credit, you must:
- Report your share of the PTET amount from line 47a-f of your partnership’s Form IT-204-IP, New York Partner’s Schedule K-1, or your S corporation’s shareholder statement, as a tax credit on Form IT-653, Pass-Through Entity Tax Credit, and include it with your New York State personal income tax return.
The PTET credit offsets the tax reported on New York State personal income tax Forms IT-201, Resident Income Tax Return, IT-203, Nonresident and Part-Year Resident Income Tax Return, and IT-205, Fiduciary Income Tax Return. If the PTET credit exceeds the tax due for the tax year, we will refund the excess credit without interest.
- Complete Form IT-225, New York State Modifications. Enter modification code A-219 (New York State pass-through entity tax [PTET] deduction addback) on Schedule A – New York State additions with the total amount of PTET credit claimed from Form IT-653, Pass-through Entity Tax Credit.
- If you claimed the NYC PTET credit, enter modification code A-222 (New York City pass-through entity tax [PTET] deduction addback) on Schedule A – New York State additions with the total amount of NYC PTET credit claimed from Form IT-653, Pass-through Entity Tax Credit.
If you are a nonresident of New York State, you must allocate these addbacks using the allocation rules in Article 22. For more information, see the instructions for Form IT-225, New York State Modifications.
Do not:
- adjust your share of these PTET amounts reported to you;
- claim an itemized deduction for your share of PTET paid on Form IT-196, New York Resident, Nonresident, and Part-Year Resident Itemized Deductions;
- include your share of the PTET paid as an estimated tax payment on your income tax return;
- claim a New York State subtraction modification for your share of PTET paid; or
- list a disregarded entity as the source of your PTET credit on Form IT-653, Pass-through Entity Tax Credit (identify the electing partnership or New York S corporation).
Note: We may adjust or disallow your credit if:
- the PTET entity does not pay the PTET or does not provide sufficient information to identify you on its PTET return, or
- you do not properly complete Forms IT-225, New York State Modifications, and IT-653, Pass-through Entity Tax Credit.
You may also owe additional tax, penalty, and interest.
For more guidance on claiming the PTET credit, see Tips to avoid common filing errors: pass-through entity tax (PTET).