New York has a dual tax system. That means you have to pay both federal and state taxes. So, for New Yorkers, the question “how long does it take to do taxes?” isn’t as simple as it feels. In fact, it’s a bit more complex as compared to residents in many other states.
Not only do they have to file IRS taxes via Form 1040, but they also have to report tax obligations to local tax authorities. Simply means more forms and added tax filing responsibilities.
Furthermore, the duration also depends on the complexity and availability of tax preparers. Hang on! We will explain three scenarios based on complexity to give you an estimate of the time required to do taxes.
Who is a Tax Preparer?
First things first, as you walk through the tax preparation process, you will need a professional tax preparer to handle all the paperwork, calculations, estimates and more. Technically, a tax preparer is a person who saves you from all the hassles.
Responsibilities of a Tax Preparer:
As the name suggests, tax preparers are certified professionals preparing taxes for individuals and businesses. They can:
- Calculate income and expenses.
- File taxes on your behalf.
- Represent you in case of audits.
- Provide expert advice for next year’s tax plans.
- File amendments in case of errors.
In short, tax preparers are the best bet for businesses and individuals with complex income/expense flows.
The “Simple” Case: W-2 Employee with No Complexities
Simple W-2 Form filing can be time-consuming, too. The process is quite simple yet can feel complex for businesses and tires for individuals.
So, even for a straightforward W-2 employee, living and working in NYC only. You will need to consider:
- Federal (IRS Form 1040): According to IRS 2024 data, an average non-business taxpayer spends 8 hours on tax preparation, including bookkeeping, tax planning and form compilation, plus $160 in taxes.
- NYS Form IT-201: If you lived and earned a whole year in NYS, you will be required to file NYS Form IT-201. It contains all information about your income and the tax you owe to the state government.
- New York City (NYC local income tax, integrated into NYS Form IT-201): This is calculated as part of your state return, but it’s an additional layer of calculation.
Estimated Time for Simple NYC Filers:
Typically, it takes 4 to 8 hours to file a W-2 Form in NYC. The process contains these three steps:
- Gathering Documents: First step is to gather all documents, including bank statements, donation receipts, property tax bills, health insurance, IRA (Individual Retirement Account) and other similar documents, if any. The whole process will take around 2 to 4 hours.
- Data Entry (Using Software): For electronic filing a software is used for data entry. You fill out the W-2 form and send it directly to the IRS. Typically, it takes 1 to 3 hours. Keep in mind that paper filing is way more time-consuming than filing through Software.
- Review and Finalization: The Final step is to review all the details. Double-check for errors and NYC-specific deductions/credits. It needs minimal time, like 0.5-1 hour.
The “Average” Case: Adding NYC-Specific Layers and Common Situations
Most New Yorkers have more than one income stream or qualify for some credits from state governments. So the average case applies to many New Yorkers who have:
- Itemized Deductions: For homeowners and residents, having SALT (State and Local Taxes) means double tax duties, which add a burden to their pockets. That’s why they prefer itemized deductions. Especially for properties. It includes tracking mortgage interest, property taxes and other eligible expenses.
- NYC Commuter Benefits: If you use pre-tax transit benefits, these are usually reported on your W-2, but understanding their impact can add a little time.
- Self-Employment/Gig Economy Income: NYC has a growing number of freelancers (self-employed people). If you’re a freelancer, rideshare driver, artist, or consultant, this will increase complexity. You don’t have an employer to withhold taxes on your behalf. So, you need to report income and expenses for your business on Schedule C (federal) and IT-201 Form (for residents) or IT-203 (for part-year)
- Rental Income/Losses: The income and losses from rental property are generally reported on the IT-201 Form. It adds record-keeping, expense tracking, though. Adding up the overall time spent on tax filing.
- Multiple States: For individuals who moved to different states during a tax year or worked in NYC but lived somewhere else, like New Jersey, they will have to file multiple state taxes. Adding extra complexity and more forms. It’s simply a lot of time-consuming.
- Investments: Any kind of investment in stocks, bonds, mutual funds, and cryptocurrency transactions adds various 1099 forms. For instance, if you invested in multiple streams, you will need to file 1099-B, 1099-DIV, and 1099-INT. Plus a Schedule D to show capital gains and losses.
Estimated Time for Average NYC Filers:
Since the process became more complex. So the time consumed in gathering documents, data entry, and Review takes more time.
- Gathering Documents: 5-10 hours, as there are multiple deductions, credits and income streams, adding more documents.
- Data Entry & Calculations : 3-8 hours are ideally enough. Although it depends on the Software you choose, the level of automation provided and the manual calculation required. Choose a software that offers an extensive level of automation, form autofill and error flags.
- Review and Optimization: 1-3 hours is sufficient to ensure all deductions and credits are captured for federal, NYS, and NYC.
Total for Average NYC Filers: An average filing will take somewhere between 9 to 21 hours.
The “Complex” Case: Businesses, High-Net-Worth, or Unique Situations
Businesses usually have more complex taxes. No matter whether it’s sole proprietorships, partnerships, C-corporations or S-corporations. As these businesses have huge investments, foreign incomes and other complex scenarios making the overall tax process time time-consuming. Here is the year-round process of tax preparation and filing.
- Record-Keeping: An extensive record of daily expenses and income.
- Tax Planning: Tax planning to minimize tax liability throughout the year.
- Multiple Business Forms: As a business, you need to file various Federal Schedules C, E, F, and specific business returns like 1120, 1120-S, and 1065.
- NYS and NYC Business Taxes: Separate business tax filings for the state and city.
- Estimated Tax Payments: Quarterly payments to both federal, state, and possibly city tax authorities.
- Professional Help: Most individuals in this category will work with a CPA or tax attorney.
Estimated Time for Complex NYC Filers:
- Record-Keeping & Planning: Usually takes 20 hours or more annually.
- Preparation & Review: If the preparation and review are done by a professional, it will take 10 to 40 hours.
Total for Complex NYC Filers: 30+ hours, often ongoing throughout the year.
Factors that Influence Tax Preparation Time in NYC:
Tax preparation and filing time varies from individual to individual. With each form, there is an increase in filing time. Some of the most crucial factors that influence tax filing time in NYC include:
- Residency: NYC has different filing requirements for full-year residents, part-year residents, or non-residents working in NYC.
- Property Ownership: Homeowners in NYC have property tax deductions and potentially co-op/condo-specific deductions.
- Specific NYC Credits: While less common than federal or state, some particular NYC credits might apply.
- Organization of Records: This is the single biggest factor. Well-organized records dramatically reduce time.
- Filing Method: Using a filing software, NYC free tax prep, or a professional tax preparer can also affect the time spent on taxes. The most efficient way is to hire a professional tax accountant. They are experienced with a lot of situations, making it easier to handle.
Key NYC-Specific Tax Forms:
For NYC residents, it is important to consider these forms for NYS-specific taxation.
- NYS Form IT-201: for a full-year resident Income tax return, including income tax calculation.
- NYS Form IT-203: Nonresident and part-year resident income tax return. It is used for those who work in NYC but live in other states.
- NYS Form IT-214: Claim for real property tax credit as homeowners or renters.
- NYC Free Tax Prep: NYC provides free tax preparation services for eligible residents. However, it can be hard and stressful to file multiple forms on your own.
Final Wrap Up:
In short, finding the exact time frame for taxes is complex to understand. The time can vary from 2 hours to 30+ hours. There is no specific number that fits all taxation. Further, while the core federal tax forms are universal, NYC’s local income tax adds complexities.
So, for average to complex tax situations, having a professional tax preparer is a must-have. They can help you understand tax issues better, represent you in case of errors and help you minimize tax duties. Thus, find a reliable tax preparation service for both personal and business tax preparation. You can lean on Tax King Inc for affordable and trustworthy taxation services.
