New York State bed buffaloes

There are several key differences between federal and NYS tax treatment of different types of income and deductions.   NYS handles these differences at the top of page 2 of Form IT-201.

TaxWise will handle these differences properly, but only if you are very careful in entering information from Form W-2 and 1099's.

NYS Bed Buffalo #1:   Sometimes you will see a W-2 box 14 amount with the designation 414(h).  That means that the amount in box 14 is a contribution made by a government employee towards his or her pension plan.  Such c ontributions are subject to New York State income, but not subject to Federal income tax.   In order to make sure it's properly handled, you need to type 414H in box 14. 

Quality Review Note:
  if you see a 414(h) amount on a W-2, make sure that the amount has flowed through to line 21 on page 2 of NYS IT-201 as a "New York Addition."

For more information about NYS differences, see the NYS Tax Department's site for volunteers.
NYS Bed Buffalo #2:  If a taxpayer has pension income (generally reported on Form 1099R), it will be treated differently by New York State than by the federal government.   New York does not tax pension benefits from pension plans for Federal employees, NYS employees, or employees of subdivisions of New York State (e.g., cities, towns, school districts, counties, in NYS.)  In addition, New York does not tax the first $20,000 of private pension plan income either.  Here's how to make sure that TaxWise will handle this NYS Bed Buffalo properly: 

On a 1099R 

Mark the box labeled Box 1 to identify pensions and annuities that qualify for the pension and annuity exclusion on line 29 of the New York resident return.

Mark the box labeled Box 2 to identify pensions that qualify for the pensions of New York State and local governments and Federal government exclusion on line 26 of the New York resident return. See the New York instructions regarding the types of pensions that qualify for this exclusion before marking this box.

Quality Review Note:  Whenever there is a 1099R, check with Professor O'Keeffe to make sure that the NYS tax return shows the appropriate treatment on line 26 or line 29.  Also, any taxable Social Security benefits shown on the federal tax return should show up as a subtraction item on line 27.  The bottom line of all this is that retired senior citizens who come to our site typically have zero taxable income on their New York State tax returns, even if they have federal taxable income.

Mary O'Keeffe,
Jan 17, 2011, 12:27 PM
Mary O'Keeffe,
Jan 17, 2011, 12:01 PM
Mary O'Keeffe,
Jan 17, 2011, 11:55 AM