NY nonresident: IT-182 allowed rental loss bigger than NY wages — what happens to the excess?

[kgz1]

Hi all — I’m a resident in MD (NY nonresident) with:

• ~$3,000 NY-source wages (RSUs that vested after I moved, but sourced to NY because they were earned while I worked in NY)

• A NY rental property with a $5,000 net loss

• On my federal return, that $5,000 rental loss is “unallowed/suspended” due to passive activity loss limits (my federal AGI is > $150k).

For NY filing (IT-203 + IT-182), I’m trying to understand:

1. Does IT-182 potentially make the full $5,000 “allowed” for NY because NY modified AGI (line 6) is low (basically the ~$3k NY wages)? I don't have other NY sourced income/gains.

2. If NY allows the full $5,000, can I net it against the $3,000 NY wages on IT-203 (so NY taxable income becomes negative and NY tax becomes $0)?

3. What happens to the extra $2,000 loss beyond the $3,000 wages:

   • Does NY carry it forward in any way (as a passive loss carryover or NY NOL), or

   • Is it effectively used up / provides no benefit in NY this year (other than reducing NY tax to $0 and refunding any NY withholding)?

I’m mainly confused about whether NY has any mechanism to preserve the excess loss when NY-source income is smaller than the allowed loss.

Thanks!

[AmyC]

Yes. The IT-182 will hold the loss.

1. IT-182 does require a federal PAL be recomputed based on your NY modified AGI. Your entire $5,000 NY loss is allowed for NY purposes.

2. Yes, you will have a negative income and allow any NY tax withheld on the RSU to be refunded to you.

3. The $2,000 loss is a net operating loss. You can carry it forward to offset future income.

Reference: NY Nonresident

[kgz1]

Thanks! Just to confirm:
1.  Based on my NY modified AGI, does this mean that for IT-203, I should put -5000 on line 11 for NYS amount even though my federal amount is $0?
2. How would I mark the $2,000 loss as a net operating loss? Do I put it manually on a form?