The NYS Department of Taxation and Finance issued a Technical Memorandum on Dec 28, 2018 highlighting the State’s decoupling from certain provisions of the federal Tax Cuts and Jobs Act of 2017. Unlike prior years, your 2018 New York State individual return will not match your federal return in many aspects. It is important that you speak with us at DSJCPA to review these differences and make sure you are getting the maximum allowable deductions on your New York State returns.
HERE ARE THE HIGHLIGHTS:
New York State itemized deductions
You may choose to itemize your deductions for New York State purposes for tax years 2018 and after, even if you did not itemize on your federal income tax return. New York opted not to follow many of the federal itemized deduction changes made by the TCJA for tax years 2018 and after, so you may be able to claim some deductions on your New York personal income tax return that are no longer available for federal purposes. For example, you may be able to claim deductions for:
- state and local real estate taxes paid, including amounts over the $10,000 federal limit;
- casualty and theft losses, including those incurred outside a federally declared disaster area;
- unreimbursed employee business expenses; and
- certain miscellaneous deductions that are no longer allowed federally (e.g. tax preparation fees, investment expenses, and safe deposit box fees).
Alimony or separate maintenance payments
New York opted not to follow changes made by the TCJA to the treatment of alimony or separate maintenance payments made under an alimony or separation agreement that was executed or modified after December 31, 2018.
Qualified moving expenses reimbursement and moving expenses
New York opted not to follow changes made by the TCJA to the deduction for moving expenses and to the exclusion from gross income (wages) for moving expenses reimbursement for tax years 2018-2025. New York will continue to allow you to exclude qualified moving expenses reimbursement and moving expenses from your NYAGI.
Change to the Empire State child tax credit
You may no longer use the amount of your current tax year’s federal child tax credit or additional child tax credit to compute your Empire State child credit for New York. Your Empire State child tax credit will now be based on the 2017 federal credit amounts and income.
529 college savings account
New York opted not to follow changes made by the TCJA to the types of withdrawals that are allowed from a Qualified Tuition Program (QTP) account established under IRC § 529. For New York purposes, withdrawals for kindergarten through 12th grade school tuition are not qualified withdrawals under the New York 529 college savings account program.
For New York purposes, a withdrawal is nonqualified if the withdrawal is actually disbursed in cash or in-kind from a New York State 529 college savings account and the funds are not used for the higher education of the designated beneficiary. Higher education generally means public or private, non-profit or proprietary post-secondary educational institutions, in or outside New York State. Therefore, any withdrawal from a New York 529 college savings account used to pay tuition in connection with enrollment or attendance at elementary or secondary public, private, or religious schools is a nonqualified withdrawal.
For any questions or concerns, please contact DSJCPA at (516) 541-6549.