The Marcum 2016 Year-End Tax Guide continues our tradition of providing timely tax guidance for the upcoming year.
Investment Tax Credit (ITC):
The Investment tax credit is available for businesses that place qualified property into service during the tax year. For the purposes of this credit, qualified property is tangible property, including buildings and structural components of buildings, that:
- Was acquired, constructed, reconstructed, or erected by the taxpayer.
- Is depreciable.
- Has a useful life of four years or more.
- Was acquired by the taxpayer by purchase.
- Is located in New York State; and
- Is principally used by the taxpayer in producing goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing; or
- Is an industrial waste treatment facility or air pollution control facility used in the taxpayer's trade or business; or is research and development (R&D) property; or
- Is principally used as a qualified film production facility.
The standard rate of the credit is 5% on the first $350 million of investment credit base, and 4% of the investment credit base that is in excess of $350 million. If the business is certified in an Empire Zone, these benefits may increase to up to 10% of the investment credit base.
A New York S Corporation must compute its ITC at the standard rate of 4% on property other than R&D, and 7% on R&D property. A C Corporation may compute the ITC on R&D property at either the standard rate or the optional rate of 9%. However, only R&D property that was computed at the standard rate may be included in the investment credit base when computing the Employment Incentive Credit. This credit is refundable for new businesses.
Employment Incentive Credit:
This credit is for businesses that qualify for the investment tax credit and have increased their average number of employees in New York State to at least 101% of their number of employees in New York State during a base year.
A percentage of the original investment credit base is used to determine this credit. The credit is also refundable to individuals, including shareholders of New York S corporations.
The Credit Amounts Include:
|Employment requirement at least||Rates|
|101% but less than 102%||1½% (.015) of investment credit base|
|102% but less than 103%||2% (.02) of investment credit base|
|103%||2½% (.025) of investment credit base|
Employee Training Incentive Program (E-TIP) Tax Credit:
Businesses that are approved participants in the Employee Training Incentive Program under Economic Development Law (EDL) and received a certificate of tax credit from the New York Empire State Development (ESD) can be eligible to receive the Employee Training Incentive Program (E-TIP) Tax Credit.
This program provides a tax credit to New York State employers for training investments that upgrade, retrain, or improve the productivity of their employees, and approved internship programs that provide training in advanced technologies.
To participate, eligible taxpayers must submit an application to ESD. For more information about the program and the application process, visit http://esd.ny.gov.
The credit is equal to 50% of the eligible training costs up to $10,000 (per employee), and 50% of the stipend paid to an intern with a cap of $3,000 per intern. The credit will be allowed for the tax year in which the eligible training is completed.
Excelsior Jobs Program Tax Credit:
Tax credits are available for strategic businesses such as high tech, bio-tech, clean-tech and manufacturing that create jobs or make significant capital investments. Eligibility includes:
- Scientific Research and Development firms creating at least five net new jobs.
- Software development firms creating at least five net new jobs.
- Agriculture firms creating at least five new jobs.
- Manufacturing firms creating at least 10 net new jobs.
- Financial services (customer service) back office operations creating at least 50 net new jobs.
- Back office firms creating at least 50 net new jobs.
- Distribution firms creating at least 75 net new jobs.
- Music production firms creating at least five net new jobs.
- Entertainment companies creating at least 100 net new jobs.
- Other firms creating at least 300 net new jobs and investing at least $6 million.
- Firms in strategic industries that make significant capital investment and have at least 25 employees; manufacturing firms that retain at least 10 employees are also eligible to apply for participation in the program.
The program is administered by Empire State Development, and eligible businesses are required to complete an online application. Approval and allocation of credits are discretionary.
Firms in the Excelsior Jobs Program may qualify for four, fully refundable tax credits over a 10-year period.
- The Excelsior Jobs Tax Credit: A credit of 6.85% of wages per new job.
- The Excelsior Investment Tax Credit: Valued at 2% of qualified investments.
- The Excelsior Research and Development Tax Credit: A credit of 50% of the Federal Research and Development credit, up to 3% of research expenditures in NYS.
- The Excelsior Real Property Tax Credit: Available to firms locating in certain distressed areas and to firms in targeted industries that meet higher employment and investment thresholds.
Empire State Film Production Credit:
This credit is allowed for businesses that paid or incurred qualified production costs for film and television shows produced within New York. To receive the credit, the business must have an allocation certificate issued by the New York State Governor's Office for Motion Picture and Television Development.
The credit amount is based on the qualified production costs. The amount is allocated by the New York State Governor's Office for Motion Picture and Television Development and is indicated on the certificate.
Empire State Musical and Theatrical Production Credit:
Qualified musical and theatrical production companies are entitled to this refundable credit upon receipt of a certificate of tax credit from Empire State Development (ESD).
ESD will issue a certificate of tax credit reflecting the amount of tax credit allowed and the allocation year of the tax credit. The credit is 25% of the sum of qualified production expenditures and transportation expenditures.
Workers with Disabilities Tax Credit:
The Workers with Disabilities Tax Credit Program provides a tax credit to qualified employers who hire individuals with disabilities in New York State. To receive this nonrefundable credit, a business must be a participant in the Workers with Disabilities Tax Credit Program and must have paid qualified wages after January 1, 2015, to a qualified employee and received a Certificate of Eligibility from the Department of Labor (DOL), which administers the program. For more information about this program and the application process, visit Department of Labor.
|If the qualified employee is a:||The credit is equal to:||The maximum credit is:|
|Full-time employee (employed not less than six months for at least 30 hours per week)||15% of the qualified wages paid after January 1, 2015.||$5,000 per employee|
|Part-time employee (employed not less than six months for at least 8 hours per week)||10% of the qualified wages paid after January 1, 2015.||$52,500 per employee|
Manufacturer's Real Property Tax Credit:
Also available for individuals
This credit is available for businesses or individuals who pay real property taxes on property in New York State that is owned or leased by a manufacturer. The property should be used during the tax year for manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing. Additionally, the individual or business must be a qualified New York manufacturer and subject to tax under the Tax Law Article 9A-22. The amount of the credit is 20% of the eligible real property taxes paid during the tax year.
Qualified Emerging Technology Company (QETC) Tax Credit:
QETC investors are allowed a credit equal to a percentage of each qualified investment in a qualified emerging technology company that has been certified by the Commissioner of Taxation and Finance. A QETC is defined as a company located in New York whose primary products or services are classified as emerging technologies under Public Authorities Law section 3102-e, and whose total annual product sales are $10 million or less. These companies must be engaged in creating or developing emerging technologies, and must qualify under the primary products or services test to claim the QETC facilities operations and training credit.
Long-Term Care Insurance Credit:
This credit is for businesses that pay premiums for qualifying long-term care insurance policies. The allowable credit is 20% of the premiums paid during the tax year for the purchase of, or for continuing coverage under, a qualifying long-term care insurance policy.
Urban Youth Jobs Program Tax Credit:
Businesses that hire unemployed, disadvantaged youths between the ages of 16 and 24 are eligible for the credits reflected in the chart below. A business must be certified by the NYS Department of Labor to participate in the program.
|If the qualified employee is hired for a:||The maximum credit is:||And is allowed as follows:|
|Full-time position (35 hours or more per week)||$5,000||
|Part-time position (at least 20 hours per week, or 10 hours per week if enrolled in high school full-time)||$2,500||
Alternative Fuels and Electric Vehicle Recharging Property Credit:
Businesses that invest in new alternative fuels vehicle refueling property or electric vehicle recharging property are entitled to this credit. For the purposes of this credit, alternative fuels vehicle refueling property includes all of the equipment needed to dispense any fuel at least 85% of the volume of which consists of one or more of the following: natural gas, liquefied natural gas, liquefied petroleum, or hydrogen.Electric vehicle recharging propertyincludes all of the equipment needed to convey electric power from the electric grid or another power source to an onboard vehicle energy storage system.
The credit for each installation of property is equal to the lesser of $5,000 or 50% of the cost of the property, less any cost paid from the proceeds of grants, that:
- Is located in New York State;
- Is used 50% or more during the tax year in a trade or business carried on in New York State;
- Constitutes alternative fuels vehicle refueling property or electric vehicle refueling property; and
- Has not been paid for from the proceeds of grants awarded before January 1, 2015, including grants from the New York State Energy Research and Development Authority or the New York Power Authority.
START-UP NY Program:
The START-UP NY program provides tax benefits to approved businesses that are located in empty space or land of approved New York State public and private colleges and universities, as well as approved strategic state assets and New York State incubators affiliated with private universities or colleges that are designated as tax-free NY areas. The purpose of this program is to encourage entrepreneurialism and job creation by innovating tax-free communities across the state.
The Start-Up Program is administered by the Empire State Development (ESD) program. Application for the program can be found on the ESD website. The program provides for numerous discretionary credits, including:
Metropolitan Commuter Transportation Mobility Tax (MCTMT) Exemption: The MCTMT exemption eliminates the MCTMT on the payroll expense in an approved business location.
Organization Tax and License and Maintenance Fees Exemption: An approved business is exempt from the organization tax imposed on domestic corporations and the license and maintenance fees imposed on foreign corporations.
Real Estate Transfer Tax Exemption (for leases): Leases of real property located in tax-free NY areas to an approved business are exempt from the New York State real estate transfer tax. To claim this exemption, the START-UP NY lease must be recorded along with a START-UP NY Sales Tax and Real Property Transfer Taxes Benefits Certificate.
Sales Tax (Credit or Refund): Businesses can claim a refund or credit for any sales or use tax paid on purchases of tangible personal property, utility services, and certain taxable services, including New York State, MCTD, and local sales and use taxes. In addition, contractors, subcontractors, and repairmen can also claim a refund or credit of any sales or use taxes paid on purchases of tangible personal property used in creating a structure or building areas; or adding to, altering, improving, maintaining, servicing, or repairing real property, property, or land of an approved business at its location in tax-free NY. The tangible personal property must become an essential part of the approved business.
Tax Elimination Credit: This credit is equal to the product of the tax-free NY area allocation factor and the tax factor. The tax-free NY area allocation factor is the percentage of the business's economic presence in the tax-free NY area where the business was approved to locate by ESD.
Telecommunication Services Excise Tax Credit: This credit is equal to the amount of excise tax paid by the approved business on telecommunication services imposed under NYS Tax Law.
Low Income Housing Credit:
This credit is for businesses that have a residential rental building in a low-income housing project that meets certain tests. Additionally, the business has to obtain a Low-Income Housing Credit Allocation and Certification from the New York State Division of Housing and Community Renewal for each building for which the credit is claimed. The Commissioner of the New York State Division of Housing and Community Renewal allocates the credit, which is taken over a 10-year period.
Rehabilitation of Historic Properties Credit:
This refundable credit is based on qualified rehabilitation expenses relating to the rehabilitation of a certified historic structure located in New York State. To be eligible, all or part of the rehabilitation project should be located within a census tract that is identified as being at or below 100% of the state median family income as calculated as of January 1 of each year. This calculation should use the most recent five-year estimate from the American Community Survey published by the U.S. Census Bureau.
For tax years beginning on or after January 1, 2015, any new credit earned for property placed in service on or after that date will be treated as a refund or overpayment of tax to be credited to the next year's tax. Any carry-forward of credit from a prior tax year may be carried over to the following years indefinitely.
For tax years beginning on or after January 1, 2010, and before January 1, 2020, the credit equals 100% of the federal credit amount allowed for the same historic structure located in New York, and the maximum total amount of the New York State credit is $5 million per structure.
Beer Production Tax Credit:
New York State businesses that are registered distributors under Article 18 of the Tax Law and produce 60 million or fewer gallons of beer in that year can be eligible for the beer production tax credit.
The credit is equal to 14 cents per gallon for the first 500,000 gallons produced in New York State in a tax year, plus 4.5 cents per gallon for each additional gallon over 500,000 (up to 15 million additional gallons).
Individual Income Tax Credits
Child and Dependent Care Credit:
Individuals are eligible to claim this state credit if they are qualified to claim the federal child and dependent care credit. To qualify, all four of the following must apply:
- Filing status of the taxpayer is single, head of household, qualifying widow with dependent child, or married filing joint return.
- The care was provided so the taxpayer(s) could work or look for work.
- The child must live in the same home as the taxpayer for more than half the year.
- The person who provided the care was not a spouse, parent of the qualifying child under age 13, or a person who can be claimed as a dependent.
The credit is a minimum of 20% and as much as 110% of the federal credit, depending on the amount of the New York State adjusted gross income. The credit is fully refundable for full-year residents, non-refundable for non-residents, and partially refundable for part-year residents.
Empire State Child Credit:
Eligible taxpayers may claim this credit if they are qualified to claim the federal earned income credit. To qualify; eligible taxpayers must be a full-year New York State resident or married to a full-year resident; have a qualifying child, and have federal adjusted gross income that is reflected within the chart below:
|FIlinf Status||Federal Adjusted Gross Income|
|Married filing a joint return||$110,000 or less|
|Single, or head of household, or qualifying widow(er)||$75,000 or less|
|Married filing separately||$55,000 or less|
If you claimed the federal child tax credit, the amount of the Empire State child credit is the greater of 33% of the federal child tax credit or $100 multiplied by the number of qualifying children. If you did not claim the federal child tax credit, the credit is equal to $100 multiplied by the number of qualifying children.
For more information, please visit:
The passing of the Protecting Americans from Tax Hike (PATH) Act of 2015 introduced many exciting changes related to the Research and Development (R&D) Tax ....
The IRS recently announced guidance regarding filing, claiming and reporting requirements related to the refundable Payroll Tax Credit provisions of the
Research and Development (R&D) tax ....
In December 2015, the Protecting Americans from Tax Hikes Act of 2015 ("Tax Extenders Bill") was signed into Law. The law includes an expansion of ....