Do S Corps Pay Taxes in NY?

Pass-through entities include S corporations, sometimes referred to as small business corporations. This implies that the business’s gains and losses are distributed to the owners and disclosed on their personal tax filings. Does New York tax S companies, though? Yes, S corporations must pay taxes to the state of New York, to answer the question.

Like any other corporation, S companies in New York must file a state tax return. Form CT-3-S, created especially for S firms, is used to file the state tax return. The corporation’s income, deductions, and credits for the tax year are reported on this form. In New York, the tax rate for S companies is 6.5% of total net income.

The corporation must first apply for federal S corporation recognition with the IRS in order to form a S corporation in New York. The corporation must submit Form CT-6 to the New York State Department of Taxation and Finance once the federal government recognizes it as a S corporation. Within 2.5 months of the corporation’s creation or the day it becomes a S corporation, this form must be submitted.

Not all New York S corporations must submit a New York City S company return. The only S corporations required to file this form are those with payroll, assets, or income within the city’s boundaries. Form NYC-4S must be used by S corporations that must submit a New York City S corporation return.

For both federal and state tax purposes, the S corporation tax rate is the same. Additionally a pass-through tax, the federal tax rate for S firms is determined by the owners’ income. S companies now pay a 21% federal tax rate, although this rate is subject to vary based on changes in tax legislation.

To sum up, S corporations in New York are subject to the same tax obligations as regular corporations, including filing tax returns and paying taxes. S corporations must file Form CT-3-S with the New York State Department of Taxation and Finance and pay a 6.5% tax rate in the state. S corporations must additionally submit a New York City S corporation return using Form NYC-4S if they have assets, employees, or revenue in New York City. S companies now pay a 21% federal tax rate, although this rate is subject to vary based on changes in tax legislation.