IT-638: START-UP NY Tax Elimination Credit (2024)
New York · NY DTF · Used for tax years 2024
Form IT-638 calculates the New York START-UP NY Tax Elimination Credit. It reports business eligibility certificate information, allocation and tax factors, and the resulting credit.
Who files this form
Form IT-638 is used to claim the START-UP NY Tax Elimination Credit. The form provides for:
- Individuals (sole proprietors), partnerships, and fiduciaries of estates or trusts that earned the credit directly.
- Partners, shareholders, and beneficiaries receiving a share of the credit.
All filers must complete line A to indicate whether they earned the credit directly or are receiving a share.
What you'll need
Have the following forms and information available, as applicable:
- Form DTF-74, Certificate of Eligibility: Use it for the approved business’s certificate number and sponsor names.
- Your tax return: Form IT-201, IT-203, IT-204, or IT-205. A nonresident estate or trust or part-year resident trust uses the tax amount from Form IT-205-A, line 11, for Schedule D.
- Business tax benefit period: The year number, from 1 to 10.
- Allocation information: Average property values and employee wages, salaries, and other compensation for the tax-free NY area and New York State.
- Tax and income amounts: Tax, other credits applied against that tax, New York adjusted gross income, and START-UP NY business income allocated within New York State.
- For a share received from another entity: The entity’s name, type, EIN, certificate number, and business tax benefit period year.
- For estates and trusts: Beneficiary names, identifying numbers, and shares of START-UP NY business income.
How to file
Submit Form IT-638 with Form IT-201, IT-203, IT-204, or IT-205.
- Enter your name and identifying number as shown on your return. Calendar-year filers mark the calendar-year box. Other filers enter the beginning and ending dates of their tax period.
- Complete line A, then lines B, C, and D, including the certificate number, sponsor information, and business tax benefit period year.
- Complete the schedules for your situation:
- Sole proprietor who earned the credit: Schedules A, D, and E.
- Partnership that earned the credit: Schedule A.
- Fiduciary that earned the credit: Schedules A, C, D, and E.
- Filer receiving a share of the credit: Schedules B, D, and E. A fiduciary also completes Schedule C.
Partnerships enter the Schedule A, line 6 allocation factor on Form IT-204, line 151. All other filers enter it on Form IT-638, line 17.
Common mistakes
- Skipping line A: All filers must complete it.
- Using the wrong benefit-period entry: Line D asks for a number from 1 to 10.
- Not rounding factors as directed: Round lines 2, 4, 6, and 15 to the fourth decimal place.
- Exceeding the line 15 limit: The result on line 15 cannot exceed 1.0.
- Using the wrong entity code in Schedule B: Enter P for a partnership, S for an S corporation, or ET for an estate or trust.
- Leaving out additional credit amounts: If applicable, include line 19 amounts from additional Forms IT-638 on line 20 before calculating the total credit on line 21.
Questions people ask
Where do I find the 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 allocation factor calculated?
Schedule A divides the tax-free NY area property amount by the New York State property amount, and does the same for employee compensation. Add those two factors and divide by two. Round each factor and the final allocation factor to the fourth decimal place.
How is the total credit calculated?
Multiply the allocation factor on line 17 by the tax factor on line 18 to get line 19. Add any line 19 amounts from additional Forms IT-638 on line 20. Add lines 19 and 20 to get the total credit on line 21.