New York State Decouples from Certain TCJA Personal Income Tax Changes

In response to the federal tax law changes made under the Tax Cuts and Jobs Act (TCJA), New York State has decoupled from certain personal income tax changes. 

New York State itemized deductions 

Taxpayers may choose to itemize their deductions for New York State purposes for tax years 2018 and after, even if not itemized on their federal income tax return. In addition, New York allows deductions no longer available for federal purposes. For example, New York allows 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 such as tax preparation fees, investment expenses, and safe deposit box fees.

Alimony or separate maintenance payments

Taxpayers who have alimony or separate maintenance payments made under an alimony or separation agreement that was executed or modified after December 31, 2018, when calculating their New York adjusted gross income are required to:

• Subtract from federal adjusted gross income any applicable alimony or separate maintenance payments made in the tax year, and
• Add to federal adjusted gross income any applicable alimony or separate maintenance payments received in the tax year.

Qualified moving expenses reimbursement and moving expenses

New York will continue to allow taxpayers to exclude qualified moving expenses reimbursement and moving expenses from their New York adjusted gross income which are not deductible/excludable under the TCJA. When calculating New York adjusted gross income, taxpayers should subtract from federal adjusted gross income:

• Any applicable qualified moving expenses reimbursement received in the tax year; and
• Any qualified moving expenses paid during the tax year.

529 college savings account 

Withdrawals from a Qualified Tuition Program (“QTP”) account established under §529 of the Internal Revenue Code for kindergarten through 12th grade school tuition are not qualified withdrawals under the New York 529 College Savings Account Program. A withdrawal is nonqualified if the withdrawal is 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.

Change to the Empire State child tax credit 

Taxpayers may no longer use the amount of current tax year’s federal child tax credit or additional child tax credit to compute the Empire State child credit for New York. The Empire State child tax credit is based on the 2017 federal credit amounts and income. 

What Does CohnReznick Think?

As the tax filing season begins, it is important to be aware of the changes to New York State’s treatment of changes made in response to the TCJA personal income tax purposes and how it may impact you.

For more information, please contact Corey Rosenthal, Principal, State and Local Tax Services, at Corey.Rosenthal@CohnReznick.com or (646) 625-5729 or Arvinder Kaur, Manager, State and Local Tax Services, at  Arvinder.Kaur@CohnReznick.com or (646) 448-5466.

Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.