Multi-state Income Taxes | Companies expanding into New York

New York Tax Filing

Expanding your business into the empire state can be beneficial on many fronts. New York businesses enjoy tax-based incentives and benefit from a highly diverse workforce as the state boasts many top-tier colleges and is home to individuals from all walks of life. New York entrepreneurs also enjoy a wealth of business development resources, and the fact that a recent $150 billion has been injected into infrastructure development, reinforces New York state as a prime business location with fertile soil for businesses that intend on global expansion.

New York state as a prime business location with fertile soil for businesses that intend on global expansion.

If you have recently expanded your business into this state, or if you’re considering doing so, understanding the cost of apportionment is important to help you accurately report earnings to the IRS and local governments. 

  • S Corporations

    • Filing Requirements
    • An S corporation is a small business corporation whose shareholders have consented to the corporation’s choice of S corporation status, as permitted under Subchapter S of Chapter One of the Internal Revenue Code (IRC). Generally, an S corporation does not pay federal income tax but, instead, the corporation’s income and deductions are passed through to its shareholders for the shareholders to report on their own personal income tax returns. The shareholders of federal S corporations subject to Tax Law Article 9-A may make a New York S election, by filing Form CT-6, Election by a Federal S Corporation to be Treated as a New York S Corporation. This includes both corporations organized under New York State law and foreign corporations (those organized under the laws of any other state) that do business, employ capital, own or lease property, maintain an office, or derive receipts from activity, in New York State.
    • Allocation & apportionment
      • One Factor Formula: Sales
      • Market-based apportionment
      • New York follows the market-based rule in sourcing receipts from performance of services to the state. Receipts from the sale of services are sourced to New York if the location of the customer is in New York
  • Partnerships

    • Filing Requirements
      • Partnerships are not subject to personal income tax. But every partnership have either (1) at least one partner who is an individual, estate, or trust that is a resident of New York State, or (2) any income, gain, loss, or deduction from New York State sources, must file a return on Form IT-204, regardless of the amount of its income (see Specific instructions on page 4). Otherwise, New York State law does not currently require a partnership to file a return solely because it has a partner that is either a partnership or corporation formed under the laws of New York State, even though the partner may be responsible for filing its own return with New York State.
    • Allocation & apportionment
      • One Factor Formula: Sales Factor
      • Market-based apportionment
        • Revenues received from customers within the state
  • Employees & individual filers

    • The following individuals are required to file a 2021 New York individual income tax return:
      • Generally, you must file a New York State income tax return if you’re a New York State resident and are required to file a federal return. You may also have to file a New York State return if you’re a nonresident of New York and you have income from New York State sources.
      • If you are a New York State resident you must file Form IT-201, Resident Income Tax Return, if you meet any of the following conditions:
        • You have to file a federal return.
        • You did not have to file a federal return but your recomputed federal adjusted gross income plus New York additions was more than $4,000 ($3,100 if you are single and can be claimed as a dependent on another taxpayer’s federal return).
        • You want to claim a refund of any New York State, New York City, or Yonkers income taxes withheld from your pay.
        • You want to claim any of the refundable or carryover credits available.
      • If you are a New York State nonresident you must file Form IT-203, Nonresident and Part-Year Resident Income Tax Return, if you meet any of the following conditions:
        • You are a nonresident with New York source income and your New York adjusted gross income Federal amount column (Form IT-203, line 31) exceeds your New York standard deduction.
        • You want to claim a refund of any New York State, New York City, or Yonkers income taxes withheld from your pay.
        • You want to claim any of the refundable or carryover credits available.
        • You had a net operating loss for New York State personal income tax purposes for the tax year, without having a similar net operating loss for federal income tax purposes.
      • If you are a New York State part-year resident you must file Form IT-203, Nonresident and Part-Year Resident Income Tax Return, if you meet any of the following conditions:
        • You are a part-year resident with any income during your resident period or you had New York source income during your nonresident period and your New York adjusted gross income Federal amount column (Form IT-203, line 31) exceeds your New York standard deduction.
        • You want to claim a refund of any New York State, New York City, or Yonkers income taxes withheld from your pay.
        • You want to claim any of the refundable or carryover credits available.
        • You are a part-year resident and you are subject to a separate tax on any lump-sum distributions for your resident period derived from or connected with New York sources.
        • You had a net operating loss for New York State personal income tax purposes for the tax year, without having a similar net operating loss for federal income tax purposes.
        • You may have additional filing responsibilities if you are a New York City or Yonkers part-year resident, have Yonkers income, or are subject to the MCTMT

Ensuring Accurate Tax Filing

Keeping a handle on these different laws and tax implications might be difficult for your staff members but can be accomplished by outsourcing a CPA. Allow an expert who deals with business structuring, accounting, and taxation regularly set up accounting software to factor in applicable tax laws for each US state.

Fusion CPA recently expanded into new states bringing us firsthand experience and knowledge. We have a team of certified public accountants who are highly skilled in handling multistate taxes. Our team of professionals understands the federal and state laws in various states and jurisdictions.

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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.

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