In an attempt to address a $1.8 billion deficit at the Metropolitan Transportation Agency while foregoing fare hikes and service cancellations, Gov. David Paterson and the New York State Legislature approved legislation in May 2009 that establishes a new Metropolitan Commuter Transportation Mobility Tax (MCTMT).
This new tax is imposed on certain employers and self-employed individuals that engage in business in the Metropolitan Commuter Transportation District (MCTD) which includes the counties of Kings, New York, Bronx, Queens, Richmond, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester.
This document outlines compliance details on this new tax as it applies to the self-employed or employers.Self–employed individuals Effective for tax years beginning on or after January 1, 2009, individuals (including partnerships and members of LLC’s that are treated as partnerships) who have net earnings from self employment in the MCTD are subject to the MCTMT.
However, if the individual’s net earnings from self employment are $10,000 or less for the tax year, no tax is due. Net earnings from self employment are defined under Sec. 1402(a) of the Internal Revenue Code.
To compute the amount of net earnings subject to the MCTMT, individuals should use the amount computed on federal schedule SE (Form 1040), Self Employment Tax.If all of an individual’s business activity is carried on within the MCTD, all of the individual’s net earnings from self-employment are allocated to the MCTD. If the individual has business activities both in and out of the MCTD, only a portion of the individual’s net earnings from self-employment are allocated to the MCTD.
More details on determining this allocation can be found on page 6 of the New York State Tax and Finance (NYSTF) memo.The amount of the MCTMT is .34 percent of the total net earnings from self-employment allocated to the MCTD for the tax year.Individuals, including partners in partnerships and LLC’s treated as partnerships, who will owe any MCTMT for the tax year must make estimated tax payments.
Further details on compliance with the estimated payment requirements can be found on page 7 of the NYSTF memo.Special rule for payment of the tax in 2009Individual’s MCTMT liability for the 2009 tax year will be computed using 10/12 of the total net earnings from self employment allocated to the MCTD.
If an individual is subject to the MCTMT for 2009, the initial estimated tax payment is due by November 2, 2009. To estimate the initial MCTMT payment, use the following formula:Step 1: Estimate the individual’s 2009 net earnings from self employment allocated to the MCTD.Step 2: Divide the amount from Step 1 by 12.Step 3: Multiply the result of Step 2 by 10.Step 4: Multiply the result of Step 3 by .34% (.0034).Step 5: Multiply the result from Step 4 by 75% (.75).The result of Step 5 is the amount of the individual’s initial estimated tax payment.EXAMPLE:Step 1: Estimated Individual 2009 Net Earnings = $50,000Step 2: $50,000/12 = $4,166.66Step 3: $4,166.66 x 10 = $41,666.66Step 4: $41,666.66 x .0034 = $141.66Step 5: $141.66 x .75 = $106.25 Importantly, there will be no penalty for the underpayment of estimated tax payments for periods prior to October 31, 2009, provided the individual includes the total estimated tax due for the period January 1, 2009, through September 30, 2009, in the October 31 payment.The estimated MCTMT payment for the period October 1, 2009 through December 31, 2009, is due by February 1, 2010.
To estimate the payment due by February 1, 2010 use the formula above but substitute 25% (.25) for 75% (.75) in Step 5.Employers Effective March 1, 2009, certain employers within the MCTD are subject to the new tax.
You are considered an employer if you are required to deduct and withhold NYS income tax from wages paid to employees, and that payroll is greater than $2,500 in any calendar quarter. This additional 34 cents per $100 will be imposed as a payroll tax similar to withholdings such as unemployment insurance, Medicare and social security.
The MCTMT is imposed at a rate of .34 percent of an employer’s payroll expense for all covered employees for each calendar quarter. An employer is prohibited from deducting from the wages or compensation of an employee any amount that represents all or any portion of the MCTMT.
The tax must be reported and paid for each calendar quarter by the last day of the month following the end of a quarter as follows: Quarter Due Date January 1 to March 31 April 30 April 1 to June 30 July 31 July 1 – September 30 October 31 October 1 – December 31 January 31There are no extensions of time allowed for employers to report or pay the MCTMT.Special Rule for Payment of the Tax in 2009The initial MCTMT report and payment for employers is due by November 2, 2009. This initial payment must include the MCTMT due for the period of March 1, 2009 through September 30, 2009. The payment for the period October 1, 2009 to December 31, 2009 is due by February 1, 2010.
This information has been provided courtesy of NYSAR.
This new tax is imposed on certain employers and self-employed individuals that engage in business in the Metropolitan Commuter Transportation District (MCTD) which includes the counties of Kings, New York, Bronx, Queens, Richmond, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester.
This document outlines compliance details on this new tax as it applies to the self-employed or employers.Self–employed individuals Effective for tax years beginning on or after January 1, 2009, individuals (including partnerships and members of LLC’s that are treated as partnerships) who have net earnings from self employment in the MCTD are subject to the MCTMT.
However, if the individual’s net earnings from self employment are $10,000 or less for the tax year, no tax is due. Net earnings from self employment are defined under Sec. 1402(a) of the Internal Revenue Code.
To compute the amount of net earnings subject to the MCTMT, individuals should use the amount computed on federal schedule SE (Form 1040), Self Employment Tax.If all of an individual’s business activity is carried on within the MCTD, all of the individual’s net earnings from self-employment are allocated to the MCTD. If the individual has business activities both in and out of the MCTD, only a portion of the individual’s net earnings from self-employment are allocated to the MCTD.
More details on determining this allocation can be found on page 6 of the New York State Tax and Finance (NYSTF) memo.The amount of the MCTMT is .34 percent of the total net earnings from self-employment allocated to the MCTD for the tax year.Individuals, including partners in partnerships and LLC’s treated as partnerships, who will owe any MCTMT for the tax year must make estimated tax payments.
Further details on compliance with the estimated payment requirements can be found on page 7 of the NYSTF memo.Special rule for payment of the tax in 2009Individual’s MCTMT liability for the 2009 tax year will be computed using 10/12 of the total net earnings from self employment allocated to the MCTD.
If an individual is subject to the MCTMT for 2009, the initial estimated tax payment is due by November 2, 2009. To estimate the initial MCTMT payment, use the following formula:Step 1: Estimate the individual’s 2009 net earnings from self employment allocated to the MCTD.Step 2: Divide the amount from Step 1 by 12.Step 3: Multiply the result of Step 2 by 10.Step 4: Multiply the result of Step 3 by .34% (.0034).Step 5: Multiply the result from Step 4 by 75% (.75).The result of Step 5 is the amount of the individual’s initial estimated tax payment.EXAMPLE:Step 1: Estimated Individual 2009 Net Earnings = $50,000Step 2: $50,000/12 = $4,166.66Step 3: $4,166.66 x 10 = $41,666.66Step 4: $41,666.66 x .0034 = $141.66Step 5: $141.66 x .75 = $106.25 Importantly, there will be no penalty for the underpayment of estimated tax payments for periods prior to October 31, 2009, provided the individual includes the total estimated tax due for the period January 1, 2009, through September 30, 2009, in the October 31 payment.The estimated MCTMT payment for the period October 1, 2009 through December 31, 2009, is due by February 1, 2010.
To estimate the payment due by February 1, 2010 use the formula above but substitute 25% (.25) for 75% (.75) in Step 5.Employers Effective March 1, 2009, certain employers within the MCTD are subject to the new tax.
You are considered an employer if you are required to deduct and withhold NYS income tax from wages paid to employees, and that payroll is greater than $2,500 in any calendar quarter. This additional 34 cents per $100 will be imposed as a payroll tax similar to withholdings such as unemployment insurance, Medicare and social security.
The MCTMT is imposed at a rate of .34 percent of an employer’s payroll expense for all covered employees for each calendar quarter. An employer is prohibited from deducting from the wages or compensation of an employee any amount that represents all or any portion of the MCTMT.
The tax must be reported and paid for each calendar quarter by the last day of the month following the end of a quarter as follows: Quarter Due Date January 1 to March 31 April 30 April 1 to June 30 July 31 July 1 – September 30 October 31 October 1 – December 31 January 31There are no extensions of time allowed for employers to report or pay the MCTMT.Special Rule for Payment of the Tax in 2009The initial MCTMT report and payment for employers is due by November 2, 2009. This initial payment must include the MCTMT due for the period of March 1, 2009 through September 30, 2009. The payment for the period October 1, 2009 to December 31, 2009 is due by February 1, 2010.
This information has been provided courtesy of NYSAR.
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