New York Modifications

New York Modifications

New York State requires taxpayers to make specific modifications to their federal adjusted gross income (AGI) when calculating New York State taxable income. These modifications are designed to align state tax rules with federal tax rules while accounting for differences in state-specific tax laws.

What Are New York Modifications?

New York modifications are adjustments made to federal AGI to determine New York State taxable income. These modifications may include additions or subtractions for items such as:

• Interest income from U.S. government authorities
• Income from partnerships or S corporations
• Capital gains and losses
• Other state-specific adjustments under Tax Law section 612

Reporting New York Modifications

Taxpayers must report these modifications on Form IT-360.1, specifically on Line 19. The instructions require:

• Identifying each modification by its number or description
• Showing the amount of each modification
• Submitting a separate sheet labeled "Form IT-360.1, Line 19 - New York modifications"
• Summing all modifications and entering the net figure on Line 19 of the return

Special Considerations for Nonresidents and Part-Year Residents

For nonresidents and part-year residents, New York source income is defined as income, gain, loss, or deduction attributable to:

• A business, trade, profession, or occupation carried on in New York State
• Ownership of real or tangible personal property in New York State

Non-New York source income is not included in the New York State taxable income calculation unless specifically required by law.

Additional Forms for Reporting Modifications

Other forms may be required depending on the taxpayer’s situation:

• Form IT-225: Used to report additions and subtractions to federal AGI that do not have their own line on the return.
• Form IT-2658: Used by partnerships and S corporations to report New York source income and related modifications.
• Form IT-203: Nonresident and part-year resident income tax return, which includes instructions for reporting S corporation income and New York source income.

Important Notes

• Taxpayers must ensure all modifications are properly documented and supported by the appropriate forms.
• For S corporation shareholders, pro rata shares of income, gain, loss, or deduction must be reported based on New York S corporation rules.
• Modifications must be calculated accurately to avoid underpayment or overpayment of state taxes.

Source:

Form IT-360.1

Form IT-2658

Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions.