Wednesday, January 30, 2019
WHAT’S NEW FOR 2018 TAX FORMS – NEW YORK
While the 2018 New York state income tax instruction booklets have been available for weeks now, the actual 2018 IT-201 and IT-201 are finally up at the NYS Department of Taxation and Finance website. Click here for IT-201 and here for IT-203.
I did a quick review of the 2018 tax returns and there does not seem to be any changes in the format or content of these forms. They look exactly the same as the 2017 forms.
The big news for 2018 New York state returns is that New York has “decoupled” from most of the individual income tax changes enacted by the GOP Tax Act.
Like many states, New York bases the state individual income tax return on the federal return, starting with the federal AGI and making state adjustments, and allowing the same itemized deductions claimed on the federal Schedule A with some state adjustments. The GOP Tax Act made multiple changes to the federal AGI and the federal Schedule A. New York State will not allow most of these changes in calculating state income tax liability.
(1) New York continues to allow a deduction for all qualified job-related moving expenses and an exclusion from taxable wages of employer reimbursements for these expenses. There is a new “subtraction modification” on the IT-201 and IT-203 to reduce federal AGI for qualified employee moving expense reimbursements included in federal taxable wages and out of pocket non-military employee moving expenses.
(2) Withdrawals from a Section 529 Qualified Tuition Program account for kindergarten through 12th grade tuition payments are not considered qualified withdrawals for determining the taxability of distributions under the New York 529 college savings account program.
(3) While the New York Standard Deduction amounts have been slightly adjusted for inflation, they have not been as substantially increased as the federal Standard Deduction amounts have been. And New York still allows a $1,000 deduction for each dependent claimed on the 2018 IT-201 or IT-203 (but not for the taxpayer or spouse).
(4) The 2018 New York Itemized Deductions are computed using the federal rules as they existed prior to the enactment of the GOP Tax Act. The deduction for property taxes is not limited to $10,000, acquisition debt interest on principal of up to $1 Million is deductible regardless of when the home was purchased, and home equity interest on up to $100,000 in principal, all casualty and theft losses, and all previously allowed Miscellaneous expenses, still subject to the 2% of federal AGI limitation, are deductible on the 2018 NY state return. And the old “Pease” limitation of itemized deductions will be used in calculating NY itemized deductions.
(5) New York will allow you to itemize on your 2018 NY State IT-201 and IT-203 regardless of whether you itemized deductions or claimed the Standard Deduction on your 2018 federal Form 1040. In the past If you took the Standard Deduction on your federal return, or if you did not have to file a federal return, you were required to take the New York Standard Deduction. You could only choose to claim itemized deductions on your NY state return if you itemized on your federal return, and you would claim the same amount of itemized deductions on the NY return that you claimed on the federal return, with some state adjustments, additions and subtractions. There is a new Form IT-196 (New York Resident, Nonresident, and Part-Year Resident Itemized Deductions) that replaces Forms IT-201-D and IT-203-D.
Many tax preparers, myself included, told some clients last year that they would no longer be able to itemize and did not need to maintain and give them documentation for certain expenses for 2018 through 2025. However, if the client lives or works in New York State they do need to maintain and provide their preparer with details of these expenses for 2018 and beyond.
There have been other changes to NY state taxes for 2018 -
(1) A special “Union dues additional adjustment” can be included in your New York Itemized Deductions for any portion of union dues paid that is not included in Form IT-196 Line 28 “Job expenses and certain miscellaneous deductions” due to the 2% of AGI exclusion. So, in effect 100% of union dues are deductible. The adjustment is Item K for the entry on Line 44 of Form IT-291) (see the Form IT-196 instructions).
(2) The New York State Child and Dependent Care Credit has been increased and enhanced. The credit amount allowed increased for taxpayers with New York AGI of at least $50,000 but less than $150,000, and, the qualified expense limit for taxpayers with more than two qualifying persons increased to $7,500 for three qualifying persons, $8,500 for four qualifying persons, and $9,000 for five or more qualifying persons.
(3) There have been some adjustments to old credits and some new credits that do not apply to any of my clients and probably most of you.
As an aside, just so you know, beginning with 2019 New York will not follow the changes to alimony enacted by the GOP Tax Act. All alimony received is included in taxable income and all alimony paid is deducted from taxable income for calculating the NY state tax liability, regardless of when the divorce or separation decree or agreement was issued or amended.