What Is Form IT-196 and How to Report Other Expenses?

Tax season brings a range of forms and deductions taxpayers must navigate. Among these, Form IT-196 is key for those itemizing deductions on New York State tax returns. This form allows taxpayers to report various expenses that can reduce taxable income, offering potential savings.

Accurately completing Form IT-196 is critical for compliance and maximizing deductions. Below, we explore its specifics and how different expenses are reported.

Deduction Categories on This Form

Form IT-196 includes several deduction categories, enabling taxpayers to itemize expenses that may lower their taxable income. Understanding these categories ensures all eligible deductions are claimed while maintaining compliance with New York State tax laws.

Local Taxes

Local taxes are a major deduction category, covering payments to municipalities and counties within New York State. Taxpayers can deduct real estate taxes on owned property and personal property taxes levied by local governments. However, the State and Local Tax (SALT) deduction is capped at $10,000, as set by the Tax Cuts and Jobs Act of 2017. This cap applies to the combined total of property taxes and either state and local income taxes or general sales taxes. Keeping detailed records of payments, such as tax bills and receipts, is essential to ensure accuracy and avoid triggering audits.

Interest

The interest deduction allows taxpayers to claim interest paid on qualifying loans, primarily mortgage interest. For mortgages taken out after December 15, 2017, the deduction is limited to the first $750,000 of indebtedness. Home equity loan interest may also qualify but only if the funds were used to buy, build, or improve the home securing the loan. Retaining Form 1098, the Mortgage Interest Statement issued by lenders, is essential to substantiate these claims.

Charitable Contributions

Charitable contributions enable taxpayers to deduct money or property donated to qualified organizations. Contributions can be in cash, property, or stocks, but the recipient must be tax-exempt under IRC Section 501(c)(3). Deductions are generally limited to 60% of adjusted gross income (AGI), with some contributions subject to lower limits. For non-cash donations exceeding $500, taxpayers must file Form 8283. Proper documentation, such as receipts or acknowledgment letters detailing donation specifics, is crucial for accuracy and compliance.

Medical and Dental Expenses

Medical and dental expenses can be deducted if they exceed 7.5% of the taxpayer’s AGI. Eligible expenses include payments for medical care, prescription medications, surgeries, and travel expenses for treatment. Health insurance premiums paid out-of-pocket and certain long-term care premiums may also qualify if not paid through a pre-tax plan. Taxpayers should meticulously record healthcare expenses, keeping receipts and invoices to justify deductions.

Other Expenses

The “Other Expenses” section covers miscellaneous deductions not included in other categories. While many miscellaneous deductions were suspended by the Tax Cuts and Jobs Act through 2025, some remain deductible, such as gambling losses up to the amount of winnings and unreimbursed expenses for certain performing artists and reservists. Evaluating the eligibility of each expense and maintaining thorough records, such as receipts and logs, is essential to substantiate claims.

Calculation Method

Calculating deductions on Form IT-196 requires organizing expenses into the appropriate categories and adhering to specific rules and limits for each. For local taxes, taxpayers must total real estate and personal property taxes, ensuring they do not exceed the $10,000 SALT cap. Interest deductions require accurate calculations of qualifying mortgage interest, verified with Form 1098. Charitable contributions involve summing donations and, for non-cash donations, determining fair market value with supporting documentation. For medical and dental expenses, the deductible portion is calculated by subtracting 7.5% of AGI from total eligible costs.

Required Documentation

Completing Form IT-196 demands thorough documentation to support each deduction. For local taxes, tax assessment notices and receipts provide verification. Interest deductions rely on Form 1098 and loan agreements to confirm eligibility. Charitable contributions require receipts or acknowledgment letters, and for non-cash donations, appraisals or valuation reports may be necessary. Medical and dental expense deductions must be backed by invoices, receipts, and insurance statements.

Filing Adjustments

If errors or omissions are discovered after filing, taxpayers may need to amend their return to accurately reflect deductions. Filing an amended return allows taxpayers to claim overlooked deductions or correct inaccuracies. This process involves reviewing the original submission alongside new or updated documentation. Taxpayers must adhere to deadlines for filing amended returns, typically within three years of the original filing date or two years from the date the tax was paid, whichever is later. Awareness of these timelines ensures compliance and avoids penalties.