The change in claiming of alimony on your 2018 Federal tax return is not the only “divorce” that has taken place in 2018.  We have been discussing the changes in the Federal tax code under the TCJA of 2018 that includes changes in the tax brackets, elimination of exemptions and adjustments to income and much more impacting almost every tax payer filing a Federal tax return for the 2018 tax year.  However, perhpas the most significant impact has been the changes made to itemizing deductions on your tax return.  The standard deduction has been doubled, dedcuction of State and Local Tax (SALT) has been capped at $10,000, and home mortgage interest cannot be deducted on home equity used for personal living expenses.  And perhaps the most significant, is the elimination of all deductions subject to 2% of the adjusted income, which include all unreimbursed job expenses for W-2 employees.  Following the disclosure of these changes the State of New York and many other states with higher property taxes said they would not stand for this impact on their state residents.  Many ideas were floated to aid taxpayers, but until the past couple of weeks the “how” had not been revealed.  The State of New York, like many other states, has changed how taxpayers will be able to report itemized deductions on their personal return.  Thus, the “divorce” between the state and Federal has been filed.  New York will allow taxpayers to itemize real property taxes above the Federal $10,000 limit.  There is no change to the deductibility of mortgage interest.  And probably the most significant, the elimination of deductibility of job expenses will be allowed.  The moral of the story is that many have thought that itemizing is a thing of the past, but nothing could be farther from the truth as keeping accurate track of your itemized could not be more important.  So despite the fact that following a divorce in 2018 you do not have to claim alimony income and are not allowed to deduct alimony payments, this “divorce” will benefit all parties involved.

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