State clarifies confusing instructions for property tax credit

By Michael Gormleymichael.gormley@newsday.com @GormleyAlbanyApril 1, 2022

ALBANY — The state has clarified instructions for its income tax form because of confusing passages that could have kept New Yorkers with a household income of up to $250,000 and a high property tax bill from collecting a new property tax relief credit.

The Real Property Tax Credit is intended to help New Yorkers who pay more than 6% of their income on property taxes, which includes many homeowners on Long Island, Westchester and in New York City. The Real Property Tax Credit is in addition to the long-standing STAR property tax rebate. Qualified homeowners can receive a credit of $250 to $350 under a complex formula on Form IT-229 after completing three pages of instructions and a worksheet.

But the instructions on state income tax forms submitted by taxpayers before March had to be changed because of complaints and confusion from tax preparers and online tax preparation companies.

“We revised the IT-229 instructions in early March in response to feedback from our community partners about specific issues that were causing taxpayer confusion,” state spokesman James Gazzale told Newsday. “We’ve also been in regular contact since then with software vendors about the changes.”

Taxpayers who submitted their state income tax forms before the instructions were clarified and missed the property tax credit can file an amendment, Gazzale said.

The problem in the instructions was the question about any rent collected on the property, which must be the taxpayer’s primary residence. The original instructions didn’t tell taxpayers what to include if no rental income was received, which could prompt taxpayers to believe they needed to collect rent to qualify for the tax credit.

The revised income tax instructions state: “Note: If no rent was received, then mark an X in the Yes box on this line.”

In addition, the state clarified the information that referred to penalties and interest included in the real property taxes did not include mortgage interest, which state officials said some taxpayers had assumed. The state also clarified that one entry required the amount of the taxpayer’s STAR tax credit, if any.

Pat Castiglione of Port Jefferson Station was one of the New Yorkers who complained and questioned the state Department of Taxation and Finance. She started tracking the tax credit a year ago, when it was announced by then-Gov. Andrew M. Cuomo. But the directions she received were confusing, so she started digging. Her effort included finding the original legislation in Albany and calling state officials.

“I get into things,” said the retired human services supervisor.

She called the state tax department directly with her questions, receiving mixed results. One official gave her “the same old baloney” that referred her to more pages of tax instructions and calculations in small type. But a second try led her to helpful expert in the state tax department who walked her through the maze.

“They made it very difficult and almost impossible to find,” she said.

“Two different tax men knew nothing about it and they are very difficult forms to fill out.” She said a friend who used an online service only found out about the credit by inputting the tax form number that Castiglione gave her. “I haven’t found one person who knew about it or whose tax man knew about it.”

“I’m just flabbergasted that the state could almost downplay information about this and make it so difficult to apply,” she said. “It’s like a hidden secret … Don’t they want people to get this?”