Quarterly federal, state and city taxes

So New York City taxes are paid to New York state, so if you make estimated payments you would make the city tax payment to the state.  New York City's income tax system is progressive and rates range from 3.078% to 3.876%.  

New York City also has two other taxes that you need to be aware of.  The first is:

The metropolitan commuter transportation mobility tax (MCTMT) is imposed on certain employers and self-employed individuals engaging in business within the Metropolitan Commuter Transportation District (MCTD). This department administers the tax for the Metropolitan Transportation Authority. 

For purposes of calculating the MCTMT, the MCTD is divided into two zones:

• Zone 1 includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island).
• Zone 2 includes the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.

The metropolitan commuter transportation mobility tax (MCTMT) applies to you if:

• you are a self-employed individual (including individual partners) with net earnings attributable to either Zone 1 or Zone 2 in the Metropolitan Commuter Transportation District (MCTD) that exceed $50,000*.

*The $50,000 threshold is computed on an individual basis for each zone, even if you file a joint income tax return.

For purposes of calculating the MCTMT, the MCTD is divided into two zones:

• Zone 1: Includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island).
• Zone 2: Includes the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.

The other is the Unincorporated Business Tax (UBT)

What Activities are Subject to This Tax?
Unincorporated Businesses include: trades, professions, and certain occupations of an individual, partnership, limited liability company, fiduciary, association, estate or trust.  The business can be active or in the process of being liquidated.

If you have two or more Unincorporated Businesses, all are treated as one for the purpose of this tax.

Tax Rates
A 4% tax rate is charged for taxable income allocated to New York City.

Who is Exempt from this Tax?

• Performing services as an employee is not subject to UBT.
• A person or entity, other than a dealer, who is only engaged in the purchase, holding, and sale of property for their own personal account (e.g. a person who owns and rents a two-family house); and
• An owner, lessee, or fiduciary who is engaged in holding, leasing, or managing real property for their own account.
• Entities engaged primarily with qualifying investment activities are partially exempt from UBT on the income.
• Associations and publicly traded partnerships treated as corporations for Federal income tax purposes; and “S Corps.” are subject to the General Corporation Tax.

Credits For Tax Years
A liability of $3,400 or less is allowed a credit for the full amount of the tax.
Liabilities between $3,401 and $5,400 are allowed a partial credit.
Individual New York City residents are allowed to claim a credit against their NYC Personal Income Tax for a portion of the UBT payments made as sole proprietors. The amount of the credit depends on the City resident's taxable income for personal income tax purposes. Part-year residents receive a partial credit.

So if you have net self-employment income you should be paying the IRS and New York state for the New Your State tax and the New York City taxes, including the MCTMT and the UBT.

Thank you for your question @lena2024 

Be well and safe!

Marc T.

Turbo Tax Expert

27 Years of Experience Helping Clients