CT-638: START-UP NY Tax Elimination Credit (2024)
New York · NY DTF · Used for tax years 2024
Form CT-638 reports the START-UP NY Tax Elimination Credit and allocation factors for corporations. It includes calculations for the credit used, refunded, or applied as an overpayment to next year’s tax and is filed with Form CT-3, CT-3-A, or CT-3-S.
Who files this form
Form CT-638 is used to claim the START-UP NY Tax Elimination Credit.
- C corporations that earned the credit: Complete lines A through D and Schedules A, C (Part 1), D, and E.
- C corporations claiming a share of the credit from a partnership: Complete lines A through D and Schedules C (Part 2), D, and E.
- New York S corporations that earned the credit: Complete lines A through D and Schedules A and B.
- New York S corporations claiming as corporate partners: Do not complete CT-638. Instead, use Form CT-34-SH, New York S Corporation Shareholders’ Information Schedule, to report the partnership’s allocation factor.
What you'll need
Have the following forms and information available, as applicable:
- Form DTF-74, Certificate of Eligibility: CT-638 asks for the certificate number and sponsor names from this form.
- Corporation details: Legal name, employer identification number (EIN), and tax period beginning and ending dates.
- Benefit-period information: The year of the START-UP NY business tax benefit period, entered as a number from 1 to 10.
- Property and compensation figures: Average property values and employee wages, salaries, and other compensation for the locations covered by your schedules.
- Franchise tax return information: Tax amounts and other credits applied against tax. Schedule B also asks for the apportionment factor from Form CT-3-S, line C.
- For corporate partners completing Schedule C, Part 2: Your share of partnership income allocated to New York State and the partner’s business income allocated to New York State.
How to file
File Form CT-638 with Form CT-3, CT-3-A, or CT-3-S.
Complete line A to show whether your corporation earned the credit itself or received a share from a partnership. Follow the form’s directions for the schedules that apply to your corporation.
The supplied form does not give a mailing address or e-file instructions.
Common mistakes
- Leaving required entries blank: All filers must enter their tax period and complete line A.
- Completing the wrong schedules: C corporations do not complete Schedule B. New York S corporations do not complete Schedules C or E.
- Using CT-638 for an S corporation’s partnership allocation: New York S corporations claiming as corporate partners must use Form CT-34-SH instead.
- Ignoring rounding directions: Round the factors on lines 2, 4, 6, 8, 10, 13, and 22 to four decimal places.
- Exceeding the line 22 limit: The result on line 22 cannot exceed 1.0.
- Requesting too large a refund: The refund entered on line 34 is limited to the unused credit on line 33.
Questions people ask
Where do I find my certificate number and sponsor names?
Use Form DTF-74, Certificate of Eligibility, issued to the approved START-UP NY business.
What if I am certified by multiple sponsors?
Mark Yes on line C and enter the sponsor names from Form DTF-74.
How is the total credit calculated?
Schedule D multiplies the allocation factor on line 24 by the tax factor on line 25 to calculate the total credit on line 26.
Can unused credit be refunded or applied to next year’s tax?
Schedule E provides for both options. Line 33 calculates unused credit available as a refund or overpayment. Enter the refund amount on line 34 and the remaining amount to apply to next year’s tax on line 35.