Article: 50528
Overview
New York’s Pass-Through Entity Tax (PTET) program allows eligible partnerships and S corporations to pay state income taxes at the entity level, thereby helping partners or shareholders circumvent the federal SALT deduction cap. Partners, members, or shareholders of electing entities may then claim a personal income tax credit for their share of the PTET paid on their behalf.
This credit is claimed on Form IT-653 – Pass-Through Entity Tax Credit, which must be submitted with your Form IT-201 (resident) or Form IT-203 (nonresident/part-year resident) return.
Who Should File Form IT-653?
You should complete Form IT-653 if:
- You were a partner, member, or shareholder in an entity that made a valid New York PTET election for the tax year, and
- The entity paid PTET on your share of income that is also taxed on your personal New York return, and
- You received a Schedule K-1 or similar statement showing the amount of PTET paid on your behalf.
Note: The PTET credit is nonrefundable—it can reduce your NYS income tax to $0 but will not generate a refund. However, unused credit may be carried forward for up to three years.
Credit Amount
The credit equals your pro rata share of the PTET paid by the electing entity, as reported to you. This amount is typically listed on a Schedule K-1 or statement from the partnership or S corporation.
How to Report
- Navigate to the State Taxes section on the left-hand side of the screen.
- Click the link: I’d like to see the forms I’ve filled out or search for a form.
- In the dropdown menu, select New York.
- Click on the IT Credits 500 – 600 Series tab.
- Select IT- 653 – Pass-Through Entity Tax (PTET) Credit to open the screen.
- Enter all applicable information.
- Click Save once complete.
Additional Resources
For further guidance, see: