What are the rules for paying estimated taxes in New York State?

by Ricklef Wohlers. 2024/09/20.

In New York State, you're generally required to pay estimated taxes if you expect to owe at least $300 in New York State tax after subtracting any credits you may be entitled to and if your withholding and other tax payments are not enough to cover your estimated tax liability. Here are the basic rules for paying estimated taxes in New York State:

1. Who Must Pay:

   • Individuals, including sole proprietors, partners, and S corporation shareholders.
   • Estates and trusts with taxable income that is not subject to withholding.
   • Corporations subject to New York State corporation tax.

2. Payment Due Dates:

   • Estimated tax payments are typically made in four installments:
     • 1st installment: April 15
     • 2nd installment: June 15
     • 3rd installment: September 15
     • 4th installment: January 15 of the following year

3. Calculating Estimated Tax:

   • Estimate your total income, deductions, and credits for the year.
   • Calculate your expected New York State tax liability for the year.
   • Subtract any expected withholding and credits.
   • Divide the result by four to determine your quarterly estimated tax payment.

4. Payment Methods:

   • Payments can be made online through the New York State Department of Taxation and Finance’s Online Services.
   • You can also pay by mail using Form IT-2105, Estimated Income Tax Payment Voucher for individuals, or the appropriate form for your entity type.
   • Electronic Funds Withdrawal (EFW) or EFTPS (Electronic Federal Tax Payment System) are other common methods.

5. Penalties for Underpayment:

   • If you don’t pay enough tax through withholding and estimated tax payments, you may be charged a penalty for underpayment of estimated tax.
   • However, you won't have to pay the penalty if your withholding and estimated tax payments equal at least 90% of the tax shown on your current year's return or 100% of the tax shown on your previous year's return.

6. Special Cases:

   • Farmers and fishermen generally have different rules and may be able to make only one estimated tax payment.
   • Nonresident and part-year resident individuals must also make estimated payments if they meet the general criteria.

7. Annualization Option:

   • If your income is uneven throughout the year, you may benefit from the annualized income installment method which allows you to make unequal payments based on income received by the installment due dates.

It's important to consult the most current guidelines from the New York State Department of Taxation and Finance or a tax professional, as tax laws and rules can change.