New York Self-Employed — Schedule C, IT-201 & NYC/Yonkers Returns

Establish the client's filing status, NY residency classification (full-year resident, part-year resident IT-203, or nonresident IT-203), and confirm the business operates as a sole proprietorship or disregarded single-member LLC — not an S-corp or partnership that would require different forms. Determine whether the client has NYC or Yonkers domicile, which triggers the NYC Unincorporated Business Tax (NYC-202) and/or Yonkers surcharge on IT-201.

Gather all gross receipts and allowable business deductions to complete federal Schedule C (Form 1040). Compute net self-employment income, then calculate self-employment tax on Schedule SE — the 15.3% SE tax on net SE income up to the Social Security wage base ($168,600 for 2024) plus 2.9% Medicare on the excess, including the 0.9% Additional Medicare Tax threshold check at $200,000 ($250,000 MFJ). Confirm the deductible half of SE tax for above-the-line deduction on Form 1040.

Convert federal adjusted gross income to New York taxable income by applying NY addition and subtraction modifications on Form IT-225. Key NY-specific items: NY does not conform to the federal QBI deduction (§199A) — add it back; NY does not conform to federal bonus depreciation — use Form IT-398 to spread the difference; NY pension/retirement income exclusions (up to $20,000 for taxpayers 59½+); New York itemized deductions on Form IT-196 vs. NY standard deduction. Compute NY income tax using the 2024 NY tax brackets (4% to 10.9% for income over $25 million). Identify applicable credits: NYC school tax credit, earned income credit (30% of federal EIC), child and dependent care credit, college tuition credit/deduction.

If the client has a place of business in New York City and net income from the sole proprietorship attributable to NYC, the NYC Unincorporated Business Tax applies (NYC Admin. Code §11-502). The UBT rate is 4% on net income allocated to NYC above the $95,000 exemption phase-out threshold ($42,500 individual). A UBT paid credit of up to 23% of UBT liability is allowed against NYC personal income tax. This phase is skipped for clients with no NYC nexus.

For a sole proprietor this phase is primarily a decision memo: sole proprietors filing Schedule C are eligible for the NY PTET election under Tax Law Article 24-A, but the election is generally beneficial only when the SALT deduction cap ($10,000 federal) is a binding constraint. Analyze whether the client should elect PTET (due by March 15 for the current year), compute the tentative benefit, and if electing, confirm the 6.85% (or graduated up to 10.9%) PTET rate paid equals the PTET credit on IT-653 claimed on IT-201.

Compute 2025 quarterly estimated tax obligations on both the federal and NY tracks to avoid underpayment penalties. Federal safe harbor: 100% of 2024 tax (110% if 2024 AGI > $150,000). NY safe harbor: 100% of prior-year NY tax or 90% of current-year NY tax (Tax Law §685(c)). NY estimated tax due dates mirror federal (April 15, June 16, September 15, January 15) on Form IT-2105. Flag the NYC UBT estimated tax requirement (NYC-5UB, due April 15, June 15, September 15, January 15) if UBT applies.