Passthrough Entity Tax Payments (PTE) a Great Deal👍🏻👍🏻: Let’s Make Sure You Make a Timely⏰Election!
Weekly Take Away: Try to be proactive, prepare for contingencies and work with a knowledgeable tax professional🦉 to take advantage of tax saving benefits💵💲…
Pass through entities and the tax advantages most states provide, encourage businesses to pay the personal taxes for their owners as a federal business expense and then show those payments as a credit on their personal state tax returns. I write about this every year as it is a “no brainer” which evolved after the tax cuts and jobs act limited the itemized deductions for state and local taxes on an individual’s federal income tax return; “affectionately” known as the SALT deduction limitation or cap.
While most states allow for PTET elections to be made when filing a business’ tax return, New York is one of the few jurisdictions that requires elections be made in the year before the tax return is filed. Consequently, businesses looking to opt into the New York State and New York City PTET regimes for 2025 need to make their elections soon; by March 15th 2025, now despite not knowing what their taxable income will be for months after the election is made.
Below are a few important reminders as the New York and New York City PTET deadline approaches:
NYS and NYC PTET Annual Election for 2025: The 2025 NYS and NYC PTET election must be made through a business’ Online Services account by March 15, 2025. New York’s website has been updated and is now accepting election filings. Note, the annual election applies to both calendar and fiscal year filers, as the PTET operates on a calendar basis for all taxpayers.
NYS and NYC PTET Extension for 2025: 2025 NYS and NYC PTET returns are due by March 15, 2026, but an electing entity can request a six-month filing extension. Note, an extension only postpones the time to file the PTET return. Tax payments, however, are still due by March 15, 2026, to avoid the imposition of interest and penalties.
NYS and NYC PTET Estimates for the 2025 tax year: For those opting into the 2025 PTET for NYS and/or NYC, a first quarter estimate is required by March 15, 2025. Additional quarterly estimates must be paid by June 15, September 15, and December 15.
Potential Changes to PTET in New York: Recently, discussions in Albany have centered on moving NYS’s PTET election due date to September 15. Such a change would allow businesses more time to evaluate their profitability to determine if a PTET election is beneficial. However, relying on the possibility of this change may be problematic without some significant retroactively applicable legislative amendments. First, any due date change would be part of the state’s budget, which isn’t due until April 1, two weeks after the current March 15 PTET election deadline. Second, even if the election date is moved to September, a business would be underpaid on its quarterly estimates due earlier in the year, resulting in penalty assessments.
Final Thoughts/Recommendations: Businesses in New York must remain aware of the current PTET deadline and due dates to ensure timely elections, filings, and payments of their tax obligations. For more information on New York’s PTET and to ensure compliance with all regulations and requirements. As of the beginning of 2024 businesses in 36 states including NJ, PA, MA, CA, CT, Il, WI and others have a similar option ; for example, in NJ this option is called BAIT, (check back on Tuesday for the visual, recap and more information on other states).
Feel free to search our website for some of our complementary resources or get in touch: Contact us if you have tax concerns, tax minimization questions or want to discuss the next steps for your business success and financial goals. Here is the link to read our blog posts; use our search box for those posts specific to PTET.