Are NYC refundable credits taxable on 1040?

USA Discussion in 'General Tax Discussion' started by Confused333, Mar 19, 2017.

  1. Confused333

    Confused333

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    Concerning line 10 on form 1040: are the NYC School Tax credit and/or the NYC Enhanced Real Property Tax Credit (for renters) supposed to be included on line 10? They are called "refundable credits" on NY state tax forms and you can receive both of them even if you pay no taxes at all. So, does the IRS consider them taxable?
     
    Confused333, Mar 19, 2017
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  2. Confused333

    Bored Accountant

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    Full Disclosure: I am a college student who is majoring in Accounting, and not a tax expert. However, I will do my best to help you with the information I have available to me.

    According to my research, basically any time that a state refundable credit provides you with an actual cash refund, then the amount is usually considered taxable income on your federal tax form. Note that federal refundable credits are not considered taxable income for either state tax purposes or federal tax purposes. Only state refundable credits are considered taxable income (and only when they created a situation where they provide you with a cash refund. In situations where the state refundable credit is used to reduce tax liability and it does not create a situation where you get a cash refund, then the credit is not considered taxable income).

    Hopefully this makes you less confused. Let me know if I helped. :)

    Source: http://www.taxnotes.com/tax-notes/f...axation-state-tax-credits/2016/05/30/18497601
     
    Bored Accountant, Apr 6, 2017
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  3. Confused333

    pndaccountants

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    If you are a New Jersey resident but you have income from sources outside New Jersey, and you are required to pay tax on that income to a jurisdiction outside New Jersey, you may be eligible for a credit against the income tax you owe to New Jersey.
     
    pndaccountants, Apr 24, 2017 at 7:41 AM
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