Hello Everyone,
Below is an example presented on the NYS Department of Finance portal and it applies to me, sole shareholder of S Corporation (except for different amounts). I have several questions. I cannot find the responses anywhere.
In this example, an overpayment of $20,000 of PTET for 2022 is refunded in 2023. The refund must be included in the S Corp NYS income by completing Form CT-225 (New York State Modifications) for year 2022. Do you know where does $20,000 go on form CT-225? Which line item? Because of that addition, S Corp's federal income will be higher than NYS income by $20,000. $20,000 will be recognized in 2022 on NYS tax return for both the entity and shareholder. However, it will be recognized on federal tax return in 2023. Does it mean that, when doing taxes for 2023 next year, both entity and shareholder will have to complete form CT-225 and IT-225 to report subtraction to federal income?
I know that it seems like a long and complex question. But maybe someone can help me with that. Thank you
Example 1: An electing entity overpays its estimated taxes and receives a refund.
In 2022, an electing entity makes estimated payments of $100,000 for the 2022 PTET year. On March 15, 2023, the taxpayer files their 2022 PTET return and computes actual PTET due of $80,000. $80,000 is allocated to the eligible partners or shareholders as PTET credits. The electing entity receives a refund of $20,000 as an overpayment. The refund is issued in 2023.
The eligible partners or shareholders must add back on their 2022 IT-225, their share of $80,000 under § 612(b)(43), which is the amount of PTET credits claimed on their Article 22 tax returns.
The electing entity must add back on its 2022 IT-225, $20,000 under § 612(b)(3), which is the amount of federal deduction for the current year not added back under § 612(b)(43). This modification will flow through to the partners, members, or shareholders.
