New York City's Unincorporated Business Tax (UBT):
Who Must File — Who Must Pay
The Unincorporated Business Tax (UBT) is imposed on any individual or unincorporated entity that is carrying on or currently liquidating a trade, business, profession, or occupation within New York City. Effective tax years beginning 2009, as influenced by the efforts of the Freelancers Union Political Action Committee, the New York State legislature enacted many favorable changes to the UBT. The first change was who must file a UBT tax return. The new legislature requires an individual or unincorporated entity that has gross receipts greater than $95,000 to file the UBT return.
Even more favorable, was the change of who must ultimately pay the 4% UBT tax. Any person whose net self employment earnings from NYC are $100,000 or less receives a UBT tax credit which offsets the UBT tax in full and results in no UBT tax due. A gradually phased out partial UBT tax credit is available for persons whose net self employment earnings from NYC are greater than $100,000but less than $150,000. Any person who has net self employment earnings from NYC greater than $150,000 must pay the UBT tax and will have no credit to offset their UBT liability.
The chart below illustrates numerous gross income and net income from NYC self employment earnings scenarios and shows whether that scenario results in a filing requirement or tax due.
|Form 1040, Sch. C, Line 7: Gross Income||NYS UBT Return Filing Requirement (y/n)||Form 1040: Sch. C, Line 31: Net Income / Form NYC 202, Line 12: UBT Business Income||NYC 202, Line 13: Less: Allowance for Taxpayer's Services||NYC 202, Line 15: Less: Exemption||NYC 202, Line 15: UBT Taxable Income||NYC 202: Line 17: UBT Tax||NYS 202, Line 20: UBT Tax Credit||NYC 202, Line 21: UBT Tax Due|
|50,000||NO||N/A *||N/A *||N/A *||N/A *||N/A *||N/A *||N/A *|
|75,000||NO||N/A *||N/A *||N/A *||N/A *||N/A *||N/A *||N/A *|
|95,000||NO||N/A *||N/A *||N/A *||N/A *||N/A *||N/A *||N/A *|
|* N/A = No Filing Requirement & No Tax Due|
Please note that a credit for NYC UBT tax paid is available to offset NYC income tax on a resident or part year resident. The credit is equal to 23% or more of the UBT tax paid. Please consult your tax advisor for further guidance.