New York Investment Credit
The New York Investment Credit is a state tax credit designed to encourage investment in qualified projects and entities within New York State. It is available to individuals, estates, trusts, partnerships, and shareholders of New York S corporations who meet specific eligibility criteria and invest in approved ventures.
Eligible Taxpayers
- Individuals (including sole proprietors)
- Beneficiaries of estates or trusts
- Partners in partnerships
- Shareholders of New York S corporations
Key Requirements and Rules
- Investment Income Limit: For most taxpayers, you cannot claim the credit if your investment income exceeds $10,000. Investment income includes taxable interest, tax-exempt interest, ordinary dividends, and net capital gains (if positive).
- Credit Allocation: Estates and trusts that divide the credit among themselves and their beneficiaries must file Form IT-212 or Form IT-665 with Form IT-205 (Fiduciary Income Tax Return) to show each beneficiary’s share.
- Reporting Requirements: Taxpayers must report their share of the credit on the appropriate forms. For example, line 7 of Form IT-219 requires the name and EIN of the estate or trust, along with the fiduciary’s name and title.
- Qualified Investments: The credit applies to investments in qualified projects such as research and development property or innovation hot spots. The credit may be allocated based on each beneficiary’s proportionate share of qualified investments.
- Carryforward: Unused portions of the credit may be carried forward indefinitely, but no refund is available for unused amounts.
Forms and Documentation
Taxpayers must complete and submit specific forms depending on their status:
- Form IT-212: Used by estates and trusts to allocate the credit or addback of credit on early dispositions to beneficiaries.
- Form IT-665: Required for estates, trusts, and partnerships to show each beneficiary’s share of the credit when dividing it.
- Form IT-205: Fiduciary Income Tax Return, which must be filed with Form IT-665 or IT-212 when allocating credits.
- Form IT-223: Required for individuals, fiduciaries, partners, or shareholders receiving income from innovation hot spots.
Important Notes
- The credit must be claimed by the same taxpayers who claimed the federal credit.
- All names and EINs on forms must match those on the New York State income tax return.
- For S corporations located in tax-free NY areas (START-UP NY), shareholders may receive a credit based on their pro rata share of income.
Source:
Form IT-665
Form IT-223
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.