NY IT-558 Adjustments for CARES related paid sick/family leave

[MiroHaley]

I'm a bit confused by the NY adjustments for paid sick leave.  IT-558 allows for these adjustments against the federal income numbers.  Two in particular are for paid sick leave, and paid family leave.  I run a single employee S-Corp, where I am both the employer and employee, and received federal credits through my quarterly payroll filings.  Yes, they increased my end of year business profit numbers and thus the federal.   

Is this an appropriate place to list them?  There are entries on my employee W-2 for them to show the values.  However, I wasn't sure if IT-558's reference to "employer" was for S-corp entities, or just employer on the individual level some how?

"S-010: Credit for paid sick leave.  If you were an employer that was allowed the credit for paid sick leave in accordance with IRC § 3131, and your federal gross income was increased by the amount of such credit, then enter the amount of such credit." 

[RobertB4444 · Accepted solution]

When you received the credit for qualified wages this year the IRS expected you to add that to your income just as though it was cash that you received.  Then, when you paid the credit out to your employees as wages and showed that expense, the credit would be zeroed out and you wouldn't pay any taxes on it.

New York State is actually offering you an additional benefit by subtracting the credit that you received from your income entirely.  You do this on IT-558 using number S-010 or S-012 depending on how you received the credit.  This subtraction applies to S-Corp employers as well as any other type of employer which received the credit.

You can read about the IRS's treatment of the credit in this article and New York State's instructions for form IT-558 are here.

[MiroHaley]

This makes sense.   I assumed I had missed it for 2020 also,  because the same sick leave credit existed for part of 2020 tax year also.  When I went back to see if I should amend 2020 NY Tax years the credit did not exist on the IT-558 that year, just a lesser list of items.   

[DMarkM1]

You are correct.  The employer sick leave credit did not exist on the NY IT558 for 2020 and the form/instruction was not modified to include it either.  Here is a link to the modification for TY 2020 NY Form IT558.  Only the unemployment addition made the cut for 2020.