The state of New York has made the following tax law changes for tax year 2021:
- Decoupling from Certain Federal Provisions:
- For tax years before January 1, 2022, the 2020-2021 New York State budget decoupled personal income tax from any amendments made to the Internal Revenue Code (IRC) after March 1, 2020. This includes changes from 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.
- 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.
- 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; 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.
What changes have been made to existing New York 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.
- Hire a Veteran Credit:
- This credit has been extended through December 31, 2021.
- 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.
- 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
- Excelsior Jobs Program Tax Credit:
- This credit has been extended through tax year 2039. $200 million per year is allocated to businesses accepted into the program through 2029. 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.
- 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.
Am I required to file a part-year and nonresident return?
According to the New York State Department of Taxation and Finance website, you must file a part-year and nonresident income tax return, if you:
- Were not a resident of the state of New York and received income during the tax year from a source within New York.
- Moved into or out of the state of New York during the tax year.
For more information about the new voluntary contributions, please refer to the New York IT-201 instructions.