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New York Claim of Right Credit

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Question
New York Claim of Right Credit

Answer

If you have claim of right income for federal tax purposes and are claiming the federal claim of right credit on your federal return, you may also be entitled to a claim of right credit for New York State, New York City, Yonkers, or MCTMT. The claim of right credit is available to individuals, estates, and trusts. Claim of right income is income that was properly reported on a prior year’s tax return, but was later determined to have been paid to you in error and therefore had to be repaid. If the claim of right credit exceeds the amount of tax imposed for the tax year, the excess will be refunded to you.

If you have federal claim of right income but elect to take the federal deduction instead of the credit, you cannot claim a credit for New York State, New York City, Yonkers, or MCTMT. Do not complete this form. However, depending upon the type of income repaid and whether you itemize your deductions for New York State purposes, you may get the deduction.

How to claim the credit

File Form IT-257 if you are an individual, estate, or trust that qualifies for the claim of right credit. Complete all sections of this form that apply to you. Be sure to submit Form IT-257 with your return.

Amount of the credit

The amount of credit for New York State residents and nonresidents and New York City or Yonkers residents is the difference between the amount of New York State, New York City, or Yonkers tax originally reported on your return for the prior year and what would have been reported for the prior year if the income had not been included on your state or city return. If you were subject to New York City or Yonkers nonresident earnings tax in the prior year, you may also be entitled to a claim of right credit for New York City or Yonkers nonresident earnings tax purposes if the claim of right income affects the computation of wages or net earnings from self-employment. The credit is the difference between the amount of New York City or Yonkers nonresident earnings tax originally reported in the prior year and what would have been reported in the prior year if the income had not been included on the nonresident earnings tax return. The amount of MCTMT credit is the difference between the amount of MCTMT originally reported on your return for the prior year and what would have been reported for the prior year if the income had not been included on your return.

Example: In the current tax year, you repaid under a claim of right $5,000 of income that was included on a prior year New York State return. The New York State tax originally reported on that prior year’s return was $809. Your prior year New York State tax computed without including the $5,000 on that return is $467. Your current year New York State claim of right credit is $342 ($809 - $467).


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Views: 1445 Created on: Jun 15, 2013
Date updated: Dec 14, 2018
Posted in: States, New York

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