NYS residents with partnership in VA. All income of Partnership is from VA with 502PTET filed. Anything special to enter in IT-204?

[Sandpiper21]

My wife and I are NYS residents.  We are the only members of a partnership registered in VA.  All income for the partnership came from VA (a rental house).  For tax year 2022, we already filed federal 1065 and VA 502PTET last week and paid VA PTE tax. 

I know we also need to file NY IT-204 even with zero income from NY.  In the past, it's very simple to fill out that form -- 0 for everything related to income and deduction. 

However, since we have tax credit on the PTE level, do I have to pay special attention with IT-204?  Is there a certain field that I need to check and enter the PTE tax paid to VA?  Should the tax paid by PTE show up on IT-204-IP? 

I won't do our 1040 and IT-201 until finishing the partnership returns first.  But I want to make sure I do IT-204 and IT-204-IP correctly as not to mess up my IT-201 deduction/credits.  

[GeorgeM777 · Accepted solution]

Yes, you do need to pay attention to IT-204; however, such form is an informational return.  You will prepare Form IT-204 to report income, deductions, gains, losses, and credits from the operation of your partnership for calendar year 2022.   

The tax you paid to Virginia is not entered on IT-204.  Rather, the information about the tax you paid to VA will be entered on NYS IT-112-R.  IT-112-R is the form that will compute the amount of the credit you will receive on your NYS return, IT-201, for having paid tax to VA on the same income that NY will tax.  This NY credit is referred to as the resident credit.   

You prepared your returns in the correct order because you prepared your non-resident tax return first.  In order for TurboTax to properly calculate your resident credit, the application needs to know the tax amount you paid to VA.  Now that you have that information, go ahead and begin to prepare you NYS tax return.  You will see a screen in the NY section that relates to taxes paid to VA (or it may use the term "another jurisdiction") and that is where you will enter the tax you paid to VA.  

@Sandpiper21