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Looking for opinion on NYS EIC limit


schirallicpa

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I have a client that got stuck by the unemployment limbo on the 2020 return.  The software hadn't updated yet, and I manually backed out the portion of unemployment that was not taxable.  However, I did not add it back on the NYS return.  So the Fed return was good,  and the NYS return needs correction.

So - here comes the notice that it should have been an add back.  Okay - no problem.  I agree with the additional tax.  But when NYS adds it back, they take away a portion of the NYS EIC.  I run the numbers in my software (ATX) adding the form (558) and it does not change the NYS EIC.  The calculation on the NYS EIC is to take a percentage of the federal EIC which did not change.  Am I missing something?

 

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I had a couple of clients that ran into this.  You have to re-calculate the federal the amount of EITC the client would have received using the NY Recomputed FAGI, and then use that amount to calculate the amount of NY EITC.  Had some clients that lost their entire NY EITC because the NY Recomputed FAGI was more than the NY Maximum Income limit for NY.

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