New York State Tax Benefits for Seniors

New York State Tax Benefits for Seniors

Seniors and retired persons have found the current economic condition difficult to endure. There are many ways for these individuals to take advantage of various tax breaks on their New York State income tax return. This article will describe some ways that they can do so.

Senior citizens or a retired person filing a New York State income tax return may qualify for special income tax benefits that can reduce your tax liability. These benefits include subtraction modifications and credits that will specifically benefit senior citizens residing in or filing New York State Income Tax Returns. Some examples include social security benefits, pensions of NYS, local and federal governments, and the pension and annuity income exclusion. These forms of income are exempt from New York State taxation.

Tax credits may also decrease their tax liability, and some are refundable. Examples of credits include the child dependent care credit, earned income credit, automated external defibrillator credit, long-term care insurance credit and the nursing home assessment credit. New York State Publication 36 discusses these tax benefits for items in detail. Below we have highlighted the tax benefits for seniors and retired persons.

Pensions of New York State, local governments and the federal government – Qualified pension benefits or distributions received by officers and employees of the United States, New York State, and local governments within New York State, are exempt from New York State, New York City, and Yonkers income taxes. This subtraction modification is allowed regardless of the age of the taxpayer or of the form the payment(s) take. This subtraction modification is allowed for a pension or distribution amount to the extent the pension or other distribution was included in your federal adjusted gross income.

Pension and annuity income exclusion – If you were age 59½ or older before January 1, 2013, you may exclude up to $20,000 of your qualified pension and annuity income from your federal adjusted gross income for purposes of determining your New York adjusted gross income. If you became age 59½ during the tax year, the exclusion is allowed only for the amount of pension and annuity income received on or after you became 59½, but not more than $20,000.
Married taxpayers who both receive pension income are each entitled to a maximum pension and annuity income exclusion of $20,000, whether they file jointly or separately. However, you cannot claim any unused portion of your spouse’s exclusion. If you receive your own pension income and your deceased spouse’s pension income, you are entitled to a maximum pension and annuity exclusion of $20,000 each year.

Long-term residential care credit – A resident in a qualified continuing care retirement community, is allowed a subtraction from federal adjusted gross income when computing your New York adjusted gross income for the portion of fees paid during the year that is attributable to the cost of providing long-term benefits under a continuing care contract. If you are married, file a joint return, and you and your spouse both qualify, you may each claim the subtraction. However, you may not claim any unused part of your spouse’s subtraction. The maximum deduction for 2013 was $4,550 per continuing care resident.

Child and dependent care credit – If you qualify to claim the federal child and dependent care credit, you can claim the New York State child and dependent care credit (whether or not you actually claimed the federal credit). The New York State credit is based on a percentage of the federal credit. Full-year and part-year New York City residents may also qualify for the New York City child and dependent care credit. If you did not file a claim for the federal child and dependent care credit, you may still be eligible to claim the New York State child and dependent care credit.

Earned income credit – The New York State earned income credit (EIC) is a special income tax credit for certain people who earn income from work. If you claimed the federal EIC and file a New York State income tax return, you qualify to claim the New York State EIC. This credit ranges from 20% to 30% of the federal credit and is based on earned income.

New York City full-year residents and New York City part-year residents who claimed the federal EIC may claim a New York City EIC. You must file a New York income tax return to claim the New York City EIC. This credit is in addition to the New York State EIC or noncustodial parent New York State EIC.

Real Property Tax Credit – You may qualify for the real property tax credit if you are a New York State resident, your household gross income for the tax year was $18,000 or less, and you pay either real property taxes or rent for your residence. If all qualified members of the household are under age 65, the credit can be as much as $75. If at least one qualified member of the household is age 65 or older, the credit can be as much as $375.

Residents who are not required to file New York State returns may qualify for a refund of the full amount of the credit. Note – Part-year residents and nonresidents of New York State do not qualify for this credit.

Credit for purchase of an automated external defibrillator – This credit is available to taxpayers who purchase a qualified automated external defibrillator. The credit is equal to the lesser of the purchase cost of the unit, or $500. There is no limit on the number of units Purchased during the tax year for which the credit may be taken. However, the credit cannot exceed $500 for each unit purchased. The credit is not refundable, and you may not carry any unused credit forward to future years.

Long-term care insurance credit – The long-term care insurance credit is equal to 20% of the premiums you paid during the tax year for the purchase of, or for continuing coverage under a qualifying long-term care insurance policy. The long-term care insurance credit is limited for part-year and nonresident individuals, estates, and trusts to the amount determined by multiplying the total credit by your income percentage.

Nursing home assessment credit – New York State allows a personal income tax credit for the portion of the assessment imposed on a residential health care facility (nursing home) pursuant to Public Health Law section 2807-d(2)(b) that is passed through to a private-pay resident of the nursing home. The amount of the credit is equal to the total portion of the assessment that is passed through and directly paid by an individual during the year (e.g., the total portion paid during 2013).

As you can see, there are numerous options available to our seniors and retired persons that could help in decreasing their New York State tax. Please feel free to contact us to further discuss any of the items in this Tax Tip.

NEED MORE INFORMATION?

If you have any questions about this Tax Tip, please contact your WithumSmith+Brown professional, a member of WS+B’s National Tax Services Group or email us at [email protected].

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Author: David Springsteen, CPA, MBA | [email protected]


To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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