Glossary

Glossary

Business income: Business income for Article 9-A taxpayers generally equals entire net income minus other exempt income and investment income.

Business income base: The taxable income base for Article 9-A taxpayers. It is computed by subtracting the prior net operating loss conversion subtraction and net operating loss deduction from apportioned business income.

Compensating use tax: Tax levied on tangible personal property and services for its consumption, storage, or use in the State of residency upon which sales tax has not been collected.

Corporate exemption: The partial or full statutory exemption of certain types of business entities from taxation.

Credit: Credits are amounts that are subtracted from tax liability (for example, credits reduce the amount of tax due by the amount of the credit):

• • Credit earned: The amount of credit generated in the current tax year.
  • Credit claimed: The amount of credit which taxpayers have available during the taxable year. Taxpayers determine this by adding credit earned in the current year to any unused credit from prior years and subtracting any applicable credit recapture. The claimed amount also reflects the imposition of any statutory limitations.
  • Credit used: The amount of credit which taxpayers actually apply to their tax liability.
  • Credit carried forward: Any unused amount of credit which is allowed to be used to offset tax liability in future years. The amount of credit carried forward is determined by subtracting the amount of credit used or refunded in the current year from the amount of credit claimed.
  • Credit refunded: Unused credit amounts requested as a refund or applied against the next liability period. These are requested amounts from the tax return, not necessarily amounts actually paid. Refund requests are subject to audit and adjustment by the New York state Tax Department and the Office of the State Comptroller.

Deduction: An amount which a taxpayer is allowed to subtract when computing the tax base.

Deferral: The legal authorization to delay the obligation to pay tax to a future period (for example, a future tax year).

Dependent exemptions: A fixed amount that is subtracted from New York adjusted gross income for an individual’s dependents, not including the taxpayer or spouse.

Entire net income: Entire net income equals federal taxable income after certain additions and subtractions for items that New York treats differently. The major adjustment in the computation of entire net income for most taxpayers is the exclusion of certain income received from related entities not included in the New York combined group.

Excise tax: A fixed, per unit tax imposed on a commodity or commodities (for example, 14 cents per gallon of beer).

Exclusion/exemption: The statutory elimination of certain items or transactions from the tax base.

Federal adjusted gross income (FAGI): The amount of federal income earned or received during the income year after certain exclusions and adjustments. Major exclusions from gross income include many government transfer payments, employer-provided pension contributions and fringe benefits, most capital gains from the sale of a primary residence, and a portion of Social Security benefits. Major adjustments to gross income include deductions for individual retirement arrangements, alimony paid, employee moving expenses, and one-half of self-employment tax paid.

Federal conformity: The extent to which state tax laws adopt or conform to various provisions of federal tax law.

Federal taxable income (FTI): The amount of taxable income before certain deductions reported by a corporate taxpayer on its federal tax return. Federal taxable income includes all income received by the taxpayer during the tax year and most deductions from income. It does not include the federal net operating loss deduction or the special federal deductions for dividends received.

Flow-through provisions: Provisions (for example, definitions, deductions, exclusions) that are derived from provisions of the federal tax law and are applied to or flow-through to state tax law.

Franchise tax: A tax imposed on business corporations for the privilege of conducting business in New York State.

Gross receipts tax: Tax levied on the total receipts (for example, income from sales) of a business.

Itemized deductions: Individual deductions that are subtracted from New York adjusted gross income and are applied in lieu of a standard deduction.

New York adjusted gross income: The amount of federal adjusted gross income earned or received during the income year after certain modifications and before the subtraction of either the standard deduction or itemized deductions, and dependent exemptions. For example, New York state income tax refunds, included in federal adjusted gross income, are subtracted in determining New York adjusted gross income.

Personal income tax: A tax imposed on the income of persons. Examples of income that may be subject to tax include wages, non-wage income (interests, dividends, capital gains), business income, and investment income.

Premiums tax: A tax imposed on insurance corporations and levied on the amount of net premiums received.

Reimbursement: An amount due to a taxpayer where there was a payment of tax, but no liability.

Sales tax: An ad valorem tax levied on sales at retail.

Service: The performance of an action or activity for others.

Standard deduction: A statutorily fixed amount, determined by filing status, subtracted from New York adjusted gross income.

Tangible personal property: Corporeal personal property of any nature.

Tax expenditure: Features of the tax law that by exemption, exclusion, deduction, allowance, credit, preferential tax rate, deferral, or other statutory device, reduce the amount of taxpayers’ liabilities to the state by providing either economic incentives or tax relief to particular classes of persons or entities, to achieve a public purpose.

Taxable income: The amount to which the applicable tax rate is applied. Taxable income is gross income (prior to any adjustments) minus modifications, deductions, and exemptions.

Tax liability: The amount of tax required to be paid by a taxpayer.

Transfer tax: A tax imposed on the transfer of tangible personal property (for example, real property) from one individual or entity to another.