The New York Department of Taxation & Finance has released guidance regarding the income tax changes provided for under the recently enacted New York State 2018-19 Fiscal Year budget bill. This guidance clarifies the definition of a resident individual for New York State income tax purposes. This guidance also confirms the change in employer wage reporting as of first quarter 2019 and explains the expansion in the youth employment tax credit.

 

 

 

Definition of Resident Individual

 

 

Current

 

The current 2018 definition of a resident individual is defined as an individual who is not domiciled in New York but maintains a permanent place of abode in New York and spends more than 183 days of the calendar tax year in New York (unless in active service in the military).

 

 

2019 & After

 

“The definition of resident individual for New York State income tax purposes has been clarified for tax years 2019 and after to state that an individual who maintains a permanent place of abode in New York State and spends more than 183 days of the tax year in New York State, whether or not they are domiciled in this state, is a resident unless they were in active service in the military.”

 

 

The guidance here clarifies residency in cases where the taxpayer changes domicile during the year. Residency does not apply if the taxpayer changing domicile does not spend more than 183 days in New York during the non‐domicile period; this was creating unfairness in comparison with a statutory resident who is not domiciled in New York during the year.

 

 

The same clarification has been made to the definition of resident individual for New York City income tax purposes for 2019 and after.

 

 

 

Quarterly Reporting of Income Tax Withholding Details

 

 

This guidance confirms that employers must report withholding tax information per employee on a quarterly basis, rather than annual. This is effective with the first quarter of 2019 reporting (report due April 30, 2019).

 

 

Recent changes were made to the reporting requirements for all employers required to file:

 

Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, or

 

Form NYS-45-ATT, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return-Attachment

 

Today, employers complete Part C, Employee wage and withholding information, including columns (a), (b) and (c), each quarter for all employees; and columns (d) and (e) are completed annually with the fourth quarter reporting.Beginning with the first quarter of 2019 reporting, employers will need to complete ALL of Part C, Employee wage and withholding information, including columns (a), (b), (c), (d) and (e) each quarter for all employees. This change is an effort to help reduce fraudulent tax refund claims.

 

 

 

Employer Tax Credit

 

 

A program administered by the New York State Department of Labor (DOL) allows an employer a tax credit for hiring certain unemployed, disadvantaged youth, ages 16 to 24, who live in New York.

 

 

As a result of the program’s success, the program is reauthorized for an additional five years, and for tax years beginning on or after January 1, 2018, the budget increases the credit amounts by 50%, from $500 ($250 for part-time workers) to $750 ($375 for part-time) per month for up to the first six months, and from $2,000 to up to $3,000 for each full-time employee who is employed for an additional six months to a year (an additional $1,500 for part-time).

 

 

For tax years beginning on or after January 1, 2019, changes are made in how the program is administered. Qualified employers will continue to submit applications to participate in the program to DOL. If approved, the employer will receive a preliminary certificate of eligibility from DOL that will state the maximum amount of tax credit that the employer may be allowed to claim and the program year in which it may be claimed.

 

 

Qualified employers will be required to submit an annual report to DOL. The report is due on or before January 31st of the calendar year after the payment of wages to a certified youth. The report must show that the employer has satisfied all eligibility requirements and must provide all the information necessary for DOL to compute a final credit amount. If DOL approves the report and eligibility for the credit, it will issue a final certificate of tax credit to the qualified employer.

 

 

Employers that file a calendar-year tax return may claim the credit for the tax year for which the final certificate of tax credit was issued. If the employer is a fiscal tax year filer, it may claim the credit on the tax return for the fiscal year that includes the date that the final certificate of tax credit was issued. For tax years beginning on or after January 1, 2019, qualified employers claiming the credit must attach the final certificate of tax credit issued by DOL to their corporate tax return.

 

 

For program year 2018, businesses can earn tax credits of up to $7,500 for eligible youth starting work between January 1, 2018 and December 31, 2018.

 

 

To review this employer tax credit in more detail, please click here.

 

 

The budget bill also extends the “hire a veteran” credit through tax year 2020. The credit is available to employers for hiring and employing, for not less than one year and not less than 35 hours each week, qualified veterans. To be eligible, a qualified veteran must now begin employment prior to January 1, 2020.

 

 

To review this employer tax credit in more detail, please click here.

 

 

To review the summary of New York’s guidance in more detail, please click here.

 

 

Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.

 

This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.