NYS: 529 Plans & Alimony

NYS has decided to not follow the changes made by the Tax Cuts & Jobs Act (TCJA) regarding 529 plans and Alimony.

The TCJA permits taxpayers to remove funds from a 529 plan to pay tuition for kindergarten through 12th grade without incurring federal tax on the withdrawal.  Unfortunately, if a NYS taxpayer withdraws funds from a 529 plan to pay tuition for elementary or secondary (high school) it will be a non-qualified withdrawal subject to NYS taxes.

The TCJA changed the law regarding the deductibility/inclusion of alimony payments.  For divorce agreements executed or modified after 12/31/2018; alimony will no longer be deductible for the payor and will not be included in the payee’s income on the federal tax return.  For NYS, alimony will still be deductible by the payor and included as income for the payee.