Income tax highlights for 2020
General changes for 2020
- Decoupling from certain federal provisions
For tax years beginning before January 1, 2022, the 2020-2021 New York State budget (Part WWW of Chapter 58 of the Laws of 2020) decoupled personal income tax from any amendments made to the Internal Revenue Code (IRC) after March 1, 2020. This includes changes made by the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act and any other federal changes to the IRC. Therefore, any amendments made to the IRC after March 1, 2020, will not apply to New York State or New York City personal income tax. See Form IT-558, New York State Adjustments due to Decoupling from the IRC, and its instructions.
- START-UP NY program applications
The application deadline for businesses that want to participate in the START-UP NY program has been extended to December 31, 2025. For more information on this program, visit the Empire State Development website at www.esd.ny.gov and see TSB-M-13(7)C, (6)I, (11)M, (1)MCTMT, (7)S, SUNY Tax-Free Areas to Revitalize and Transform Upstate New York Program.
- New York City resident tax rates
The New York City resident tax rates and the 14% additional tax have been extended and now apply to tax years beginning before 2024.
- Tax Department authorized to provide unclaimed tax benefits
Effective April 3, 2020,
- the Tax Department is authorized to compute and issue a New York State and New York City earned income credit when it discovers a taxpayer is eligible for such a credit and did not claim the credit on his or her personal income tax return; and
- if an individual taxpayer has elected to claim a New York itemized deduction, but the Tax Department determines that the New York standard deduction is greater than the allowable itemized deduction, the Tax Department will recompute the taxpayer's tax liability using the standard deduction. Taxpayers will be notified if an adjustment is made to their election.
- New York call center jobs act
As of June 30, 2020, an employer intending to relocate a call center or 30% or more of their call center employees from New York to a foreign country must notify the New York State Department of Labor (DOL) at least 90 days prior to the move. The Commissioner of DOL will annually compile a list of call center employers that have relocated and post the list on DOL's public website and provide a copy of the list to the Commissioner of Taxation and Finance.
A call center employer that appears on the annual list will have several tax credits denied by the Commissioner of Taxation and Finance for the five tax years, excluding short tax years, immediately succeeding the tax year the call center employer appears on the annual list, provided the agreement for the tax credit was entered into after June 30, 2020.
- Warrantless state tax debt collection methods
The warrantless state tax debt collection methods under Tax Law §§ 174-c and 1701 have been extended through March 31, 2025.
Tax Law § 174-c allows the Commissioner of Taxation and Finance (Commissioner) to serve income executions (wage garnishments) on individual tax debtors and, if necessary, on employers of tax debtors, for collection of fixed and final tax debts without filing a public warrant.
Tax Law § 1701 allows the Commissioner to use the financial institution data match system for collection of fixed and final tax debt, regardless of whether a warrant has been filed.
Changes to existing credits
- Rehabilitation of historic properties credit
For tax years beginning on or after January 1, 2020, the credit has been expanded to include a qualified rehabilitation project undertaken within a state park, state historic site, or other land owned by the state, that is under the jurisdiction of the Office of Parks, Recreation and Historic Preservation. See Form IT-238, Claim for Rehabilitation of Historic Properties Credit, and its instructions.
- Hire a veteran credit
- Long-term care insurance credit
For tax years beginning on or after January 1, 2020, the credit has been amended to allow a taxpayer (including nonresident and part-year resident taxpayers) to claim the credit only if the taxpayer's New York adjusted gross income is less than $250,000. The amendment also provides that the credit amount cannot exceed $1,500. See Form IT-249, Claim for Long-Term Care Insurance Credit, and its instructions.
- Empire State film production and Empire State film post-production tax credits
Several amendments were made to these credits. See Form IT-248, Empire State Film Production Credit, Form IT-261, Empire State Film Post-Production Credit, and their instructions (Form IT-248-I and Form IT-261-I).
- Excelsior jobs program tax credit
This credit has been extended through tax year 2039. In addition, enhancements have been made to the program to add tax credits for green projects aimed at reducing greenhouse gas emissions and supporting the use of clean energy. For more information on this credit, visit the Empire State Development website at www.esd.ny.gov.
- Employer-provided childcare credit
Beginning with tax year 2020, there is a credit available to taxpayers who are allowed the federal employer-provided childcare credit under IRC § 45F. See Form IT-652, Employer-Provided Childcare Credit, and its instructions.
- Recovery tax credit
Beginning with tax year 2020, there is a credit available to businesses hiring eligible individuals in recovery from a substance use disorder for part-time and full-time positions in New York State. See Form IT-651, Recovery Tax Credit, and its instructions.