How are S-corporations taxed in New York State?

In New York State, S-corporations benefit from a unique tax structure. Here are the main points regarding their taxation:

Federal Classification: S-corporations are generally pass-through entities for federal tax purposes, meaning that income, deductions, and credits flow through to shareholders and are reported on their individual tax returns.
New York State Treatment: For New York State, S-corporations that have elected federal S-corporation status are typically treated in a similar pass-through manner. However, they are subject to an entity-level franchise tax known as the New York S Corporation Franchise Tax.
Franchise Tax: The New York S Corporation Franchise Tax is calculated based on various factors, which can include:
- A fixed dollar minimum tax, which varies based on gross receipts.
- A tax based on the corporation’s entire net income.
S Corporation Shareholders: Shareholders of New York S-corporations are required to report their share of the corporation's income, losses, deductions, and credits on their individual New York State tax returns. This means that income from a New York S-corporation is taxed at the individual level.
Additional Compliance: S-corporations must adhere to specific New York State filing requirements in addition to federal obligations. This includes submitting Form CT-3-S, New York S Corporation Franchise Tax Return, along with other relevant documentation.

For precise calculations and to ensure compliance with all New York State requirements, it is advisable for S-corporations and their shareholders to consult a tax professional or accountant familiar with New York tax laws.