NY IT-204 Instructions for the Partnership Return

New York’s Form IT-204 is the informational partnership return that every partnership with New York source income, or with at least one New York resident partner, must file. The partnership itself owes no income tax on the return, but the numbers it reports flow out to each partner and drive what those partners owe the state. These IT-204 instructions walk through who files, what goes on the form, how income gets modified and allocated to New York, and the related filings that ride alongside it.

Who Must File and When

New York Tax Law Section 658 requires a partnership return from every partnership that has income derived from New York sources or that has a partner who is a New York resident.¹ “Partnership” for this purpose includes LLCs and LLPs treated as partnerships for federal tax purposes. A single resident partner is enough to trigger the filing obligation, even if the entity earned all of its income outside New York.

Calendar-year filers must file by the 15th day of the third month after the tax year closes, which is March 15 for most partnerships. When that date falls on a weekend or holiday, the deadline moves to the next business day. Calendar-year 2025 returns are due March 16, 2026, because March 15 falls on a Sunday.² Fiscal-year partnerships follow the same 15th-day-of-the-third-month rule measured from their own year-end.

A partnership can get an automatic six-month extension by filing Form IT-370-PF on or before the original due date.³ The extension buys time to file the return. It does not extend the deadline for paying anything owed, including the Metropolitan Commuter Transportation Mobility Tax. Interest and penalties on unpaid MCTMT continue to accrue during the extension period.

What to Gather Before You Start

The top of the return asks for the Federal Employer Identification Number, the NAICS business activity code, and the principal business address. The accounting method reported on the IT-204 must match what the partnership used on its federal Form 1065.⁴

You also report the total number of partners and their residency status. That breakdown drives which partner schedules are required and whether the partnership must make estimated tax payments for nonresident partners. Missing a partner’s taxpayer identification number costs $50 per omission, capped at $10,000 per calendar year.⁵

The completed IT-204 must include a full copy of the federal Form 1065 and all supporting federal schedules, including the federal K-1s. Any New York credit calculation forms, such as Schedule C, also need to be attached.

Schedule A: New York Modifications to Federal Income

Schedule A is where you adjust the partnership’s federal Form 1065 income to reflect New York’s tax rules. Additions bring in items New York taxes but the federal government doesn’t. Subtractions remove items the federal government taxes but New York exempts. The net figure is the partnership’s modified income, which becomes the starting point for allocation.

Additions

The most common addition is state and local income taxes that the partnership deducted on its federal return. New York doesn’t allow that deduction, so those taxes get added back.⁶ For partnerships that elected into the New York Pass-Through Entity Tax, the PTET itself is not treated as a state income tax for this addback.

Interest earned on bonds issued by other states or their political subdivisions is another frequent addition. That interest is exempt from federal tax, but New York taxes it unless the issuing entity is one in which New York participates through an interstate compact.⁷ Interest the partnership paid on debt used to buy securities whose income is exempt from New York tax must also be added back.

Partnerships that claimed the federal Section 179 deduction on a sport utility vehicle weighing more than 6,000 pounds must add back that deduction for New York purposes, unless the partner is an eligible farmer for the farmers’ school tax credit.⁸

Subtractions

Interest income on U.S. government obligations is the most common subtraction. The federal government taxes this interest, but states cannot.⁷

Depreciation differences generate subtractions too. New York has historically decoupled from federal bonus depreciation under IRC Section 168(k), so the partnership may have claimed accelerated depreciation federally that New York doesn’t recognize. The state requires its own depreciation schedule, and the difference produces an addition in early years and a subtraction later as the state figure catches up. If the partnership previously added back a Section 179 deduction on a heavy SUV and later recaptures any of that federal deduction, the recaptured amount becomes a subtraction.⁸

For partnerships operating entirely within New York, the modified income figure is the New York source income. Multistate partnerships take it into Schedule B.

Schedule B: Allocating Income Inside and Outside New York

Schedule B determines what share of modified income is attributable to New York. The allocation percentage is what ultimately limits the tax burden on nonresident partners, so the numbers matter.

Most partnerships use an equally weighted three-factor formula based on property, payroll, and receipts.⁴ Each factor is a fraction: the partnership’s New York amount divided by its total everywhere. The three fractions are averaged to produce one allocation percentage.

Property is the cost or value of real and tangible personal property the business uses, comparing New York property to total property.
Payroll is total compensation paid to employees, comparing amounts paid for work performed in New York to total compensation everywhere.
Receipts are gross receipts from sales and services, sourced by where the services were performed or where tangible goods were delivered.

Corporate partners create a wrinkle. When computing the allocation for a corporate partner subject to Article 9-A, the partnership uses a single-receipts factor rather than the three-factor formula, and that partner’s Schedule IT-204-CP reflects the single-factor calculation.

Certain industries follow their own allocation rules that override the general formula. Transportation companies may allocate based on in-state versus out-of-state mileage, and financial services firms use specialized receipts-based sourcing rules.⁴

If the standard method produces a result that doesn’t fairly reflect the partnership’s business activity in New York, the partnership can petition the Department of Taxation and Finance for a discretionary adjustment. The request must be submitted in writing, separate from the return, and must lay out the full factual basis for why the statutory formula is inequitable.⁹ The partnership carries the full burden of proof, and until the department grants the request, it must file using the standard formula.

Partner Schedules: IT-204-IP and IT-204-CP

Once New York income is calculated and allocated, it flows to the partners on state-level K-1 equivalents. Which form goes to which partner depends on what the partner is.

Form IT-204-IP is prepared for individual partners, estates, trusts, and any partner that is itself a partnership or LLC treated as a partnership.
Form IT-204-CP is prepared for corporate partners subject to Article 9-A, LLCs treated as corporations, and, along with IT-204-IP, for partners that are themselves partnerships or LLCs.

When a partner is itself a partnership or LLC, the filing partnership provides both forms to that partner but only files the IT-204-IP with the IT-204 return.¹⁰

Each schedule reports the partner’s distributive share of income, deductions, and capital gains, isolating the amounts allocated to New York. The partner’s share of any MCTMT liability and New York tax credits also appears on these forms. Residency status governs how a partner uses those numbers: a resident partner owes New York tax on their entire distributive share regardless of where the income was earned, while a nonresident is taxed only on the portion allocated to New York sources.⁴

Estimated Tax for Nonresident Partners

Partnerships with nonresident individual partners who earn New York source income must make quarterly estimated tax payments on those partners’ behalf using Form IT-2658. This covers both personal income tax and, for partnerships doing business in the Metropolitan Commuter Transportation District, estimated MCTMT.¹¹

Estimated payments are not required in several situations:

No payment is required for a partner whose estimated New York tax for the year would be $300 or less per tax type.
If the partnership elected into the Pass-Through Entity Tax for the current year, personal income tax estimated payments are not required for nonresident individual partners.
A nonresident partner who files Form IT-2658-E with the partnership, certifying they will handle their own estimated tax and filing obligations, is exempt. The partnership keeps the certificate on file but does not send it to the Tax Department.

A partnership that misses required payments faces a $50 penalty per partner for each failure.¹² Underpayment penalties apply if total estimated payments fall below the lesser of 90% of the current year’s required amount or 100% of the prior year’s amount, or 110% if New York source income allocated to nonresidents and C corporations exceeded $150,000.¹¹

The PTET Election and How It Changes the Return

New York’s Pass-Through Entity Tax lets partnerships pay state income tax at the entity level, generating a federal deduction that works around the $10,000 federal SALT cap for individual partners. The PTET is optional, and the election must be made fresh each year.

To elect in, the partnership opts in online through the Tax Department’s website on or after January 1 but no later than March 15 of the tax year.¹³ If March 15 falls on a weekend or holiday, the deadline extends to the next business day. The election becomes irrevocable after the due date of the first PTET estimated quarterly payment.

Partnerships that elect PTET make quarterly estimated payments, each equal to at least 25% of the required annual PTET payment. The election also has a practical effect on the IT-204: it removes the personal income tax estimated payment obligation for nonresident individual partners under Form IT-2658, since the entity-level tax covers their liability.¹¹ Partners claim a credit for their share of the PTET paid on their individual New York returns.

The Annual Filing Fee on Form IT-204-LL

LLCs and LLPs treated as partnerships pay an annual filing fee on Form IT-204-LL, separate from the IT-204 itself. Regular partnerships are subject to the fee only if their New York source gross income reaches $1,000,000.¹⁴

The fee is based on New York source gross income for the tax year immediately preceding the year the fee covers. For LLCs and LLPs treated as partnerships:

$0 to $100,000: $25
$100,001 to $250,000: $50
$250,001 to $500,000: $175
$500,001 to $1,000,000: $500
$1,000,001 to $5,000,000: $1,500
$5,000,001 to $25,000,000: $3,000
Over $25,000,000: $4,500

Disregarded-entity LLCs with New York source income pay a flat $25. If the entity had no New York source gross income for the preceding year, the fee is also $25.¹⁵ There is no proration for short tax years.

The IT-204-LL is due on the same date as the IT-204, and there is no extension of time to file or pay this fee.¹⁵ Entities that have no New York source income and file the IT-204 only because they have a resident partner do not need to file Form IT-204-LL at all.¹⁴

How to File and Pay

New York mandates electronic filing for partnerships that prepare their own returns using approved e-file software and have broadband internet access.¹⁶ In practice, the vast majority of partnerships file through approved third-party software. Form IT-204-LL can also be e-filed using state-approved software.¹⁷

Partnerships that file on paper mail the completed form to the address specified in the official IT-204 instructions, and the return must be signed by a partner or authorized representative. Any MCTMT owed must be paid by the original due date regardless of any extension. Payments can be made by electronic funds withdrawal, direct payment through the Tax Department’s website, or by check or money order.

If the partnership filed Form IT-370-PF for the automatic extension, the completed IT-204 must be submitted before the extension period ends. Payments remitted with the extension request are credited against the final liability.³

Penalties for Late or Incomplete Returns

A partnership that fails to file the IT-204 by the deadline, including any extension, faces a penalty of $50 per partner per month or partial month, up to a maximum of five months. The penalty counts every partner who was subject to New York tax at any point during the tax year.⁵ For a 20-partner entity that works out to $1,000 per month and a $5,000 maximum. The penalty can be waived on a showing of reasonable cause and an absence of willful neglect.

Interest on late MCTMT payments runs at a rate the Tax Department sets quarterly, compounded daily. Because the rate adjusts periodically, a partnership carrying an unpaid balance across multiple quarters may face different rates in each period.

The $50-per-partner penalty for failing to make required Form IT-2658 estimated tax payments applies independently of the late-filing penalty. Both can stack when a partnership misses its deadlines across the board.¹²

1
New York State Senate. New York Tax Law 658 – Requirements Concerning Returns, Notices, Records and Statements
2
New York State Department of Taxation and Finance. Instructions for Form IT-204-LL Partnership, Limited Liability Company, and Limited Liability Partnership Filing Fee Payment
3
Department of Taxation and Finance. Instructions for Form IT-370-PF Application for Automatic Extension of Time to File for Partnerships and Fiduciaries
4
New York State Department of Taxation and Finance. IT-204 Instructions for Partnership Returns
5
New York State Senate. New York Tax Law 685 – Additions to Tax and Civil Penalties
6
New York State Senate. New York Tax Law 612 – New York Adjusted Gross Income of a Resident Individual
7
Cornell Law School. NY Comp Codes R and Regs Tit 20 117.3 – Modification of Partnership Items in Partners New York State Personal Income Tax Return
8
Department of Taxation and Finance. Instructions for Form IT-225 New York State Modifications
9
Tax.NY.gov. TSB-M-11(3)C – Change in Procedure for Requesting Discretionary Adjustments to the Method of Allocation
10
Tax.NY.gov. Instructions for Form IT-204 Partnership Return Tax
11
Tax.NY.Gov. Instructions for Form IT-2658 Report of Estimated Tax for Nonresident Individual Partners and Shareholders
12
Tax.NY.Gov. Instructions for Form IT-2659 Estimated Tax Penalties for Partnerships and New York S Corporations
13
Tax.NY.gov. Pass-through Entity Tax (PTET)
14
New York State Department of Taxation and Finance. Instructions for Form IT-204-LL Partnership, Limited Liability Company, and Limited Liability Partnership Filing Fee Payment
15
Tax.NY.Gov. Partnership, LLC, and LLP Annual Filing Fee
16
Tax.NY.gov. Electronic Filing Mandate for Business Taxpayers
17
Department of Taxation and Finance. Form IT-204-LL, Partnership, Limited Liability Company, and Limited Liability Partnership Filing Fee Payment Form