Filing Information
- Your filing status and gross income determine whether you have to file a tax return.
- Age is not a factor in determining whether a person must file. Even minors (including students) and senior citizens must file if they meet the income filing requirements.
- Gross income means taxable income after exclusions but before personal exemptions are subtracted. It does not include nontaxable benefits. See page 19 to find out which types of income are not taxable.
- Members of the Armed Forces see page 10 for additional information.
Use the following chart to determine whether you must file a tax return. This chart is a guide only and may not cover every situation. If you need assistance, contact the Division’s Customer Service Center (609-292-6400).
Who Must File
Your residency status is: |
Your filling status is: |
and your gross income from everywhere was more than: |
Full-Year Resident . File Form NJ-1040 (Resident Return) as a full-year resident if:
|
Single Married/CU partner, filing separate return | $10,000 (from all sources) |
| Married/CU couple, filing joint return Head of household Qualifying widow(er)/ surviving CU partner | $20,000 (from all sources) | |
Part-Year Resident . File Form NJ-1040 (Resident Return) as a part-year resident if: You met the definition of resident for only part of the year. NOTE: Both part-year resident (Form NJ-1040) and part-year nonresident (Form NJ-1040NR) returns may have to be filed when a partyear resident receives income from New Jersey sources during the period of nonresidence. |
Single Married/CU partner, filing separate return | $10,000 from all sources (for the entire year) |
| Married/CU couple, filing joint return Head of household Qualifying widow(er)/ surviving CU partner | $20,000 from all sources (for the entire year) | |
Nonresident . File Form NJ-1040NR (Nonresident Return) as a nonresident if:
You may also be considered a nonresident for New Jersey income tax purposes if you were domiciled in New Jersey and you met all three of the following conditions for the entire year:
|
Single Married/CU partner, filing separate return | $10,000 (from all sources) |
| Married/CU couple, filing joint return Head of household Qualifying widow(er)/ surviving CU partner | $20,000 (from all sources) |
* A home (whether inside or outside of New Jersey) is not permanent if it is maintained only during a temporary or limited period for the accomplishment of a particular purpose. Likewise, a home used only for vacations is not a permanent home.
You Also Need to File a Return if
- You had New Jersey income tax withheld and are due a refund.
- You paid New Jersey estimated taxes for 2007 and are due a refund.
- You are eligible for a New Jersey earned income tax credit or other credit and are due a refund.
Other Filing Information
Domicile. A domicile is any place you regard as your permanent home—the place to which you intend to return after a period of absence (as on vacation abroad, business assignment, educational leave, etc.). A person has only one domicile, although he or she may have more than one place to live. Once established, your domicile continues until you move to a new location with the intent to establish your permanent home there and to abandon your New Jersey domicile. Moving to a new location, even for a long time, does not change your domicile if you intend to return to New Jersey.
A place of abode, whether inside or outside of New Jersey, is not permanent if it is maintained only during a temporary stay for the accomplishment of a particular purpose (e.g., temporary job assignment). If New Jersey is your domicile, you will be considered a resident for New Jersey tax purposes unless you meet all three conditions for nonresident status (see “Who Must File” on page 8). Likewise, if New Jersey is not your domicile, you will only be considered a New Jersey resident if you maintain a permanent home and spend more than 183 days here.
Guidelines for Part-Year Residents
Filing Requirements. Any person who became a resident of this State or moved out of this State during the year is subject to New Jersey income tax for that portion of the income received while a resident of New Jersey. Part-year residents must file a resident return and prorate all exemptions, deductions, and credits, as well as the pension and other retirement income exclusions, to reflect the period covered by the return. A person who receives income from a New Jersey source while a nonresident must file a New Jersey nonresident return.
If you were a New Jersey resident for only part of the taxable year, you are subject to the tax if your income for the entire year exceeds $20,000 ($10,000 if filing status is single or married/CU partner, filing separate return), even though the income reported for your period of residence was below these thresholds. If the income received during the entire year was $20,000 or less ($10,000 if filing status is single or married/CU partner, filing separate return), you must enclose a copy of your Federal income tax return or a statement to that effect if you did not file a Federal return.
NOTE: If you derived any income from New Jersey sources during your period of nonresidence, it may also be necessary to file a New Jersey nonresident return. Any withholdings should be allocated between the resident and nonresident returns. For more information, see Form NJ-1040NR, New Jersey nonresident return and instructions.
Line 14
Wages. You must determine from each W-2 you receive the portion of your .State wages, tips, etc.. that you earned while you were a New Jersey resident. If your W-2 indicates only wages earned while you were a New Jersey resident, use the amount from the .State wages, tips, etc.. box. If your employer did not separate your resident and nonresident wages on the W-2, you must prorate the .State wages, tips, etc.. amount for the period of time you lived in New Jersey. Add the amounts reportable for the period of New Jersey residency and place the total on Line 14.
Do not include any W-2(s) where the total W-2 income was derived from outof- State sources during your period of nonresidence.
Other Income. For interest, dividends, pensions, and other income, include on your return only those amounts received while a resident of New Jersey. Part-year resident partners and, in general, S corporation shareholders must prorate the entity .s income based on the number of days in the entity.s fiscal year that you were a resident divided by 365 (366 for leap years). Partners and shareholders should request Tax Topic Bulletin GIT-9P, Income From Partnerships, or GIT-9S, Income From S Corporations, for instructions on reporting distributiveshare of partnership income and net pro rata share of S corporation income.
Line 27a
Pension Exclusion. If you were a New Jersey resident for only part of the taxable year and had total income for the entire year of $100,000 or less before subtracting any pension exclusion, you may qualify for a pension exclusion if you meet the other eligibility requirements. If you qualify, prorate the exclusion by the number of months you were a New Jersey resident. For this calculation 15 days or more is a month.
Line 27b
Other Retirement Income Exclusion. If you (and/or your spouse/ civil union partner if filing jointly) were 62 years of age or older on the last day of the tax year, you may qualify to exclude other income on Line 27b. There are two parts to the total exclusion:
Part I, the unclaimed portion of your prorated pension exclusion, and Part II, a special exclusion for taxpayers who are unable to receive Social Security or Railroad Retirement benefits. Do not complete Worksheet D on page 28 to calculate the total exclusion amount you are eligible to claim. Instead, calculate your total exclusion as follows: Part I. Total the earned income (wages, net profits from business, partnership income, and S corporation income) you received for the entire year. If your earned income for the entire year was $3,000 or less and you did not use your entire prorated pension exclusion at Line 27a, you may be able to use the unclaimed pension exclusion at Line 27b provided total income for the entire year before subtracting any pension exclusion was $100,000 or less.
Part II. If you are unable to receive Social Security or Railroad Retirement benefits, but would have been eligible for benefits had you fully participated in either program, you may also be eligible for an additional exclusion, whether or not you used all of your prorated pension exclusion on Line 27a.
For more information request Tax Topic Bulletin GIT-6, Part-Year Residents.
Lines 29 - Total Exemption Amount.
Your total exemptions must be prorated based upon the number of months you were a New Jersey resident. For this calculation 15 days or more is a month.
Total Exemptions x Mos. NJ Resident / 12 = Line 29
See the instructions for Line 29 on page 29 to calculate the .total exemption amount. to be prorated.
Lines 30, 31, 32, and 33 - Deductions.
You may deduct medical expenses, qualified Archer medical savings account (MSA) contributions, health insurance costs of the self-employed, alimony and separate maintenance payments, and qualified conservation contributions based on the actual amounts paid for the period of time you lived in New Jersey . Use Worksheet E on page 29 to determine the medical expense deduction. In addition, eligible taxpayers may qualify for a prorated Health Enterprise Zone (HEZ) deduction.
Line 36c - Property Tax Deduction.
You may also be eligible to claim a deduction for property taxes you paid, or rent constituting property taxes (18% of rent due and paid) during your period of residency. When you do the calculation to determine whether the deduction or credit is better for you, prorate the minimum tax benefit of $50 ($25 if filing status is married/CU partner, filing separate return and you maintain the same residence as your spouse/civil union partner) based on the number of months you occupied your New Jersey residence. For this calculation 15 days or more is a month. Use this prorated figure instead of the $50 figure ($25 if filing status is married/ CU partner, filing separate return and you maintain the same residence as your spouse/civil union partner) at Line 8, Schedule 1 or Line 5, Worksheet F.
Line 48 - Property Tax Credit.
You must prorate the amount of any property tax credit on Line 48 based on the number of months you occupied your qualified New Jersey residence. For this calculation 15 days or more is a month.
Line 50 - New Jersey Earned Income
Tax Credit. If you are eligible and filed for a Federal earned income credit, you also qualify for a New Jersey earned income tax credit. The amount of your credit must be prorated based upon the number of months you were a New Jersey resident. For this calculation 15 days or more is a month. For more information, request Tax Topic Bulletin GIT-6, Part-Year Residents.
TAXPAYER'S BILL OF RIGHTS The New Jersey Taxpayers. Bill of Rights simplifies tax administration and ensures that all taxpayers.individuals and businesses alike.are better informed and receive fair and equitable treatment during the tax collection process. Highlights of the Taxpayers. Bill of Rights include: Service.
Appeals. Time to appeal to the Tax Court is generally 90 days. Interest on Refunds.
For more information on the rights and obligations of both taxpayers and the Division of Taxation under the Taxpayers. Bill of Rights, request our publication ANJ-1, New Jersey Taxpayers. Bill of Rights. |
Guidelines for Military Personnel
Residents. A member of the Armed Forces whose home of record (domicile) is New Jersey when entering the service remains a resident of New Jersey for income tax purposes, and must file a resident return even if assigned to duty in another state or country, unless he or she qualifies for nonresident status (see chart on page 8). If you are a New Jersey resident, you are subject to tax on all your income, including your military pay, regardless of where it is earned, unless the income is specifically exempt from tax under New Jersey law. Mustering-out payments, subsistence and housing allowances are exempt.
Military pensions are exempt from New Jersey gross income tax, regardless of your age or disability status. See instructions for Line 19 on page 23.
A member of the Armed Forces whose home of record is New Jersey and who is stationed outside the State (whether living in barracks, billets, apartment, or house) and does not intend to remain outside New Jersey , continues to be a resident and must file a resident return and report all taxable income. However, if a serviceperson pays for and maintains facilities such as an apartment or a home outside of New Jersey , either by out-of-pocket payments or forfeiture of quarters allowance, such facilities will constitute a permanent home outside of New Jersey . In this case, the serviceperson is not considered a New Jersey resident for tax purposes.
Nonresidents. A member of the Armed Forces whose home of record (domicile) is outside of New Jersey does not become a New Jersey resident when assigned to duty in this State. A nonresident serviceperson .s military pay is not subject to New Jersey income tax and he or she is not required to file a New Jersey return unless he or she has received income from New Jersey sources other than military pay. Mustering-out payments, subsistence and housing allowances are also exempt. A nonresident serviceperson who has income from New Jersey sources such as a civilian job in off-duty hours, income or gain from property located in New Jersey, or income from a business, trade, or profession carried on in this State must file a New Jersey nonresident return, Form NJ-1040NR.
If your permanent home (domicile) was New Jersey when you entered the military, but you have changed your state of domicile or you satisfy the conditions for nonresident status (see chart on page 8), then your military pay is not subject to New Jersey income tax. File Form DD-2058-1 or DD-2058-2 with your finance officer to stop future withholding of New Jersey income tax. If New Jersey income tax was erroneously withheld from your military pay, you must file a nonresident return (Form NJ-1040NR) to obtain a refund of the tax withheld. For more information, see the nonresident return instructions.
Spouses/Civil Union Partners of Military Personnel. Spouses/civil union partners (of military personnel) who were not domiciled in New Jersey when they married the military spouse or entered into the civil union are not considered residents of New Jersey if:
- The principal reason for moving to this State was the transfer of the military spouse/civil union partner; and
- It is their intention to leave New Jersey when the military spouse/civil union partner is transferred or leaves the service.
New Jersey law requires that a married couple’s filing status for New Jersey gross income tax purposes be the same as for Federal income tax purposes unless they are a civil union couple. A married couple filing a joint Federal return must file a joint return in New Jersey. However, when one spouse/civil union partner is a New Jersey resident and the other is a nonresident for the entire year, the resident may file a separate return unless both agree to file jointly as residents. If a joint resident return is filed, their joint income will be taxed as if both were residents.
Extensions. Special rules apply to members of the Armed Forces of the United States and civilians providing support to the Armed Forces. See “Military Extensions ” below.
Death Related to Duty. When a member of the Armed Forces serving in a combat zone or qualified hazardous duty area dies as a result of wounds, disease, or injury received there, no income tax is due for the taxable year the death occurred, nor for any earlier years served in the zone or area.
For more information on military personnel, request Tax Topic Bulletin GIT-7, Military Personnel.
When to File
In general, your New Jersey income tax return is due when your Federal income tax return is due. For calendar year filers, the 2007 New Jersey income tax return is due by April 15, 2008. Fiscal year filers must file their New Jersey income tax return by the 15th day of the fourth month following the close of the fiscal year.
Postmark Date. All New Jersey income tax returns postmarked on or before the due date of the return are considered to be filed on time. Tax returns postmarked after the due date are considered to be filed late. When a return is postmarked after the due date, the filing date for that return is the date the return was received by the Division, not the postmark date of the return. Interest on unpaid liabilities is assessed from the due date of the return.
Extension of Time to File An extension of time is granted only to file your New Jersey resident income tax return. There is no extension of time to pay tax due. Penalties and interest are imposed whenever tax is paid after the original due date.
Six-Month Extension You may receive a sixmonth extension of time to file your New Jersey resident income tax return if at least 80% of the tax liability computed on your Form NJ-1040 when filed is paid in the form of withholdings, estimated, or other payments by the original due date, and
- Federal extension filed. A copy of your Federal Application for Automatic Extension is enclosed with your final return and the oval at the top of the NJ-1040 is filled in (if the extension application was filed by phone or online, your confirmation number is entered in the space provided at the top of Form NJ-1040); or
- No Federal extension filed. You file a request for a six-month extension on Form NJ-630, Application for Extension of Time to File New Jersey Gross Income Tax Return, by the original due date of the return. Taxpayers who file Form NJ-630 will not receive an approved copy. We will notify you only if your request is denied, but not until after your return is actually filed.
NOTE: If a Federal extension is filed, Form NJ-630 must still be filed by the original due date if you are required to make a payment to satisfy the 80% requirement.
Civil Union Couples. Civil union partners filing a joint return must either provide copies of the Federal extension application (or confirmation number) for both partners, or they must file Form NJ-630.
If you fail to satisfy the requirements outlined for extension, or you fail to file your return by the extended due date, your extension will be denied and penalties and interest will be imposed from the original due date of the return. See “Penalties, Interest, and Collection Fees” on page 15.
Military Extensions Special rules apply to members of the Armed Forces of the United States and civilians providing support to the Armed Forces. A person on active duty with the Armed Forces of the United States who may not be able to file timely because of distance, injury, or hospitalization as a result of this service, will automatically receive a six-month extension by enclosing an explanation with the return when filed.
Combat Zone. New Jersey allows extensions of time to file income tax returns and pay any tax due for members of the Armed Forces and civilians providing support to the Armed Forces serving in an area which has been declared a .combat zone. by executive order of the President of the United States or a .qualified hazardous duty area. by Federal statute. Once you leave the combat zone or qualified hazardous duty area, you have 180 days to file your tax return. Enclose a statement with your return to explain the reason for the extension.
In addition, if you are hospitalized outside of the State of New Jersey as a result of injuries you received while serving in a combat zone or qualified hazardous duty area, you have 180 days from the time you leave the hospital or you leave the combat zone or hazardous duty area, whichever is later.
Qualifying military and support personnel, as defined above, are granted an extension of time for paying tax for the period of combat service or hospitalization, plus 180 days.
Enclose a statement of explanation with your return when you file. No interest or penalties will be assessed during a valid extension for service in a combat zone or qualified hazardous duty area. This extension is also granted to a taxpayer.s spouse/ civil union partner who files a joint return.
How to Pay
The balance of tax due must be paid in full by the original due date of the return. If you owe less than $1, no payment is required. You may make your payment by check or money order, electronic check (e-check), or credit card.
Check or Money Order. You will find a payment voucher (Form NJ-1040-V) at the front of this booklet. If you owe tax and are sending the payment with your 2007 return, enter the amount of tax due in the boxes on the payment voucher. Do not make changes to any information preprinted on the payment voucher. Instead, make any necessary changes on Form NJ-1040 (and TR-1040). For nformation about mailing forms, see .Where to Send Your Return. on page 13.
Make check or money order payable to State of New Jersey . TGI. Write your social security number on the check or money order. Use social security numbers of both husband and wife/civil union partners for a joint return. Send your payment for the balance due with the payment voucher in the same envelope with your tax return.
If you are paying a balance due for the 2007 tax year and are making the first installment of estimated tax for 2008, please use separate checks or money orders for each payment. Send your 2008 estimated tax payment with an NJ-1040-ES voucher to the address on that payment voucher. Do not include the estimated tax payment with your 2007 income tax return.
Electronic Check (e-check). You may be able to pay your 2007 New Jersey income taxes or make a payment of estimated tax for 2008 by e-check. This option is available on the Division.s Web site (www.state.nj.us/treasury/taxation/). Taxpayers who do not have Internet access can make a payment by e-check by contacting the Division.s Customer Service Center at 609-292-6400. Do not send in the payment voucher if you pay your taxes by e-check.
When using e-check on the Web, you will need your social security number and date of birth to make a payment. Be sure the social security number you enter matches the first social security number shown on the form for which you are making your payment, and the date of birth you enter is the date of birth for that person.
NOTE: (1) If you do not enter your social security number and date of birth properly, you will not be able to pay by e-check. (2) If you are filing a New Jersey return for the first time, or your filing status is different than the filing status on your 2006 return, you may not be able to pay by e-check.
Credit Card. You may pay your 2007 New Jersey income taxes or make a payment of estimated tax for 2008 by creditcard. Pay by phone (1-800-2PAYTAX, toll-free) or online (www.state.nj.us/ treasury/taxation/) and use a Visa, American Express, MasterCard, or Discover credit card. You may be asked to enter a jurisdiction code to make your payment. The code for New Jersey is 4000. Do not send in the payment voucher if you pay your taxes by credit card.
There is a convenience fee of 2.49% paid directly to Official Payments Corporation based on the amount of your tax payment. A $1 convenience fee will be charged for all tax payments of $40 or less.
Time Limit for Assessing Additional Taxes. The Division of Taxation has three years from the date you filed your income tax return or the original due date of the return, whichever is later, to send you a bill for additional taxes you owe. There is no time limit if you did not file your tax return, or if you filed a false or fraudulent return with the intent to evade tax. The time limit may be extended if:
- You amended or the IRS adjusted your Federal taxable income or your Federal earned income credit;
- You amended your New Jersey taxable income;
- You entered into a written agreement with the Division extending the time to make an assessment;
- You omit more than 25% of your gross income on your New Jersey income tax return; or
- An erroneous refund is made as a result of fraud or misrepresentation by you.
Where to Send Your Return
Your packet contains a large envelope. Use the large envelope to mail your NJ-1040 and TR-1040 along with related enclosures, payment voucher, and check or money order for any tax due. On the flap of the large envelope you will find preprinted address labels with different addresses for different categories of returns. To ensure your return is mailed properly:
- Remove all labels along perforations from envelope flap; and
- Choose the correct label for your return.
Mail Returns Requesting a Refund (or with No Tax Due) With or Without Tenant Homestead Rebate Applications to:
STATE OF NEW JERSEY
DIVISION OF TAXATION
REVENUE PROCESSING CENTER
PO BOX 555
TRENTON NJ 08647-0555Mail Returns Indicating Tax Due Together With Payment Voucher and Check or Money Order to:
STATE OF NEW JERSEY
DIVISION OF TAXATION
REVENUE PROCESSING CENTER
PO BOX 111
TRENTON NJ 08645-0111Mail Tenant Homestead Rebate Applications Filed Without Income Tax Returns to:
Moisten and affix only the correct label on the front of the large return envelope.
STATE OF NEW JERSEY
DIVISION OF TAXATION
REVENUE PROCESSING CENTER
PO BOX 197
TRENTON NJ 08646-0197
Do not staple, paper clip, or tape your check or money order to the voucher.
Refunds
A return must be filed to claim a refund for overpayment of tax. If the refund is $1 or less, you must enclose a statement specifically requesting it.
Time Period for Refunds. You have three years from the date the return was filed or two years from the time tax was paid, whichever was later, to claim a refund. If you and the Division agree in writing to extend the period of assessment, the period for filing a refund claim will also be extended.
Interest Paid on Refunds. If the Division takes more than six months to send you your income tax refund, you have a right to receive interest on that refund. Interest at the prime rate, compounded annually, will be paid from the later of:
- the date the refund claim was filed;
- the date the tax was paid; or
- the due date of the return.
No interest will be paid when an overpayment is credited to the next year’s tax liability or on an overpayment or portion of an overpayment which consists of a New Jersey earned income tax credit.
New Jersey law requires that any money owed to the State of New Jersey, any of its agencies, the Internal Revenue Service, or another claimant state or city that has a personal income tax set-off agreement with New Jersey be deducted from your refund or credit before it is issued. Homestead rebates may also be affected. These debts include, among other things, money owed for past due taxes, child support due under a court order, school loans, hospital bills, and IRS levies. If the Division applies your refund, credit, or rebate to any of these debts, you will be notified by mail.
Deceased Taxpayers
If a person received income in 2007 but died before filing a return, the New Jersey income tax return should be filed by the surviving spouse/civil union partner, executor, or administrator. Use the same filing status that was used on the final Federal income tax return, unless the decedent was a partner in a civil union. Print “Deceased” and the date of death above the decedent’s name. Do not prorate exemptions or deductions unless the decedent was a part-year resident. The due date for filing is the same as for Federal purposes. In the area where you sign the return write “Filing as Surviving Spouse” or “Filing as Surviving Civil Union Partner” if appropriate. A personal representative filing the return must sign in his or her official capacity. Any refund check will be issued to the decedent’s surviving spouse/civil union partner or estate.
Income in Respect of a Decedent. If you had the right to receive income that the deceased person would have received had he or she lived, and the income was not included on the decedent.s final return, you must report the income on your own return when you receive it. The income or gain is included on Line 25, as .Other. income.
Estates and Trusts
Filing Requirements for Estates and Trusts. The fiduciary of an estate or trust may be required to file a New Jersey gross income tax return for that estate or trust. The return for an estate or trust must be filed on a New Jersey Fiduciary Return, Form NJ-1041. The fiduciary must also provide each beneficiary with a New Jersey Schedule NJK-1 which shows the beneficiary.s share of the estate or trust income actually distributed or required to be distributed during the taxable year.
Revocable grantor trusts are required to file a New Jersey Fiduciary Return, Form NJ-1041, where there is sufficient nexus with this State and the statutory filing requirement is met. For further information, see the Fiduciary return, Form NJ-1041, instructions.
Filing Requirements for Beneficiaries. The net income earned by an estate or trust does not retain its character, i.e., interest, partnership income; rather it is a specified income category . .Net Gains or Income Derived Through Estates or Trusts.. You must report as net income from estates or trusts the Total Distribution reported on your Schedule NJK-1, Form NJ-1041 and include it on Line 25, Other Income. If a Schedule NJK-1 was not received, the interest, dividends, capital gains, business or partnership income, etc. listed on your Federal K-1 must be adjusted to reflect New Jersey tax law and then netted together before inclusion on the .Other. income line. Enclose a copy of your NJK-1 or Federal K-1 with your return. If the income from a grantor trust is reportable by or taxable to the grantor for Federal income tax purposes, it is also taxable to the grantor for New Jersey gross income tax purposes. See instructions for Line 25 on page 26 for reporting requirements.
Partnerships
A partnership is not subject to gross income tax. Individual partners are subject to tax on the income they earned from the partnership under the Federal Internal Revenue Code and the New Jersey Gross Income Tax Act. See page 26 for information on reporting income from a partnership. Every partnership having a New Jersey resident partner or income from New Jersey sources must file a New Jersey Partnership Return, Form NJ-1065, with the New Jersey Division of Taxation by the 15th day of the fourth month following the close of the partnership.s taxable year. For more information on partnership filing, request Form NJ-1065 and instructions.
Estimated Tax
Estimated tax means the amount which you estimate to be your income tax for the taxable year after subtracting withholdings and other credits.
TIP: You are required to make estimated tax payments using Form NJ-1040-ES when your estimated tax exceeds $400. Instructions for computing the estimated tax and making the payments are included with the form. Review the amount of your New Jersey gross income tax on your expected gross income (after deductions and credits) to determine if you need to make estimated tax payments for 2008.
To avoid having to make estimated tax payments, you may ask your employer to withhold an additional amount from your wages by completing Form NJ-W4. Failure to file a Declaration of Estimated Tax or pay all or part of an underpayment will result in interest charges on the underpayment.
Underpayment of Estimated Tax. If you failed to make all of the required estimated tax payments as described above, you should request Form NJ-2210, Underpayment of Estimated Tax by Individuals, Estates or Trusts. Complete Form NJ-2210 to determine if interest is due and if so, calculate the amount. Enter on Line 45 the amount of interest due from line 19, Form NJ-2210. Be sure to fill in the oval below Line 45 and enclose Form NJ-2210 with your return.
Amended Returns
If you received an additional tax statement (W-2 or 1099) after your return was filed, or you discovered that you made any error or omission on your return, file an amended New Jersey resident return, Form NJ-1040X.
Changes in Your Federal Income Tax or Federal Earned Income Credit. If you receive a notice from the Internal Revenue Service that they changed your reported income, and that change altered your New Jersey taxable income, or if you receive a notice that your Federal earned income credit has been changed, and that change alters your New Jersey earned income tax credit, you must notify the Division of the change in writing within 90 days. File an amended tax return and pay any additional tax due.
If you file an amended Federal return which changes your New Jersey taxable income or your Federal earned income credit, you must file an amended New Jersey resident return, Form NJ-1040X, within 90 days.
Accounting Method
Use the same accounting method for New Jersey gross income tax that you used for Federal income tax purposes. Income must be recognized and reported in the same period as it is recognized and reported for Federal income tax purposes.
Rounding Off to Whole Dollars
When completing your return and the accompanying schedules, you may show the money items in whole dollars. If you have to add two or more items to figure the total to enter on a line, include cents when adding the items and round off only the total. When entering the rounded total on the line, eliminate any amount under 50 cents and increase any amount 50 cents or more to the next higher dollar. If you do round off, do so for all amounts. When rounding, enter zeros after the decimal point for cents.
Penalties, Interest, and Collection Fees
Penalty and interest should be included with the payment of any tax due.
Late Filing Penalty 5% per month (or fraction of a month) up to a maximum of 25% of the outstanding tax liability when a return is filed after the due date or extended due date. A penalty of $100 for each month the return is late may also be imposed.
Late Payment Penalty 5% of the outstanding tax balance may be imposed.
Interest 3% above the prime rate for every month or fraction of a month the tax is unpaid, compounded annually. At the end of each calendar year, any tax, penalties, and interest remaining due (unpaid) will become part of the balance on which interest is charged.
Collection Fees In addition, if your tax bill is sent to our collection agency, a referral cost recovery fee of 10% of the tax due will be added to your liability. If a certificate of debt is issued for your outstanding liability, a fee for the cost of collection of the tax may also be imposed.
Signatures
Sign and date your return in blue or black ink. Both husband and wife/civil union partners must sign a joint return. If you are a tenant filing a homestead rebate application (Form TR-1040) with your tax return, it is not necessary to sign the rebate application. However, if you are filing only Form TR-1040, the application must be signed and dated in ink. The signature(s) on the form you file must be original; photocopied signatures are not acceptable. A return without the proper signatures cannot be processed and will be returned to you. This causes unnecessary processing delays and may result in penalties for late filing or a delay or denial of your rebate.
Don't Need Forms Mailed to You Next Year? Taxpayers who pay someone else to prepare their returns probably do not use the income tax return booklets mailed to them each year. If you do not need a booklet mailed to you next year, fill in the oval below the signature line. Telling us that you do not need a booklet next year will help us reduce printing and mailing costs.
TIP: Preparer Authorization. Because of the strict provisions of confidentiality, Division of Taxation personnel may not discuss your return or enclosures with anyone other than you without your written authorization. If, for any reason, you want a Division of Taxation representative to discuss your tax return with the individual who signed your return as your .Paid Tax Preparer,. we must have your permission to do so. To authorize the Division of Taxation to discuss your return and enclosures with your .Paid Tax Preparer, . fill in the oval above the preparer.s signature line.
Tax Preparers. Anyone who prepares a return for a fee must sign the return as a .Paid Preparer. and enter his or her social security number or Federal preparer tax identification number. Include the company or corporation name and Federal identification number, if applicable. A tax preparer who fails to sign the return or provide a tax identification number may incur a $25 penalty for each omission. Someone who prepares your return but does not charge you should not sign your return.
NOTE : Any tax preparer who prepared 50 or more New Jersey gross income tax resident returns in 2006 must use electronic methods to file all 2007 New Jersey resident income tax returns and to pay any tax on behalf of the taxpayer. A tax preparer is liable for a penalty of $50 for each return he or she fails to file electronically when required to do so.
Keeping Tax Records
Keep copies of your tax returns and the supporting documentation of income, age and/or disability, deductions, and credits until the statute of limitations has expired for each return. Generally, this is three years after the filing date or two years from the date the tax was paid, whichever is later.
Privacy Act Notification
The Federal Privacy Act of 1974 requires an agency requesting information from individuals to inform them why the request is being made and how the information is being used. Your social security number is used primarily to account for and give credit for tax payments. The Division of Taxation also uses social security numbers in the administration and enforcement of all tax laws for which it is responsible. In addition, the Division of Taxation is required by law to forward an annual list to the Administrative Office of the Courts containing the names, addresses, and social security numbers of individuals who file a New Jersey resident tax return or tenant homestead rebate application. This list will be used to avoid duplication of names on jury lists.
Federal/State Tax Agreement
The New Jersey Division of Taxation and the Internal Revenue Service have entered into a Federal/State Agreement to exchange income tax information in order to verify the accuracy and consistency of information reported on Federal and New Jersey income tax returns.
Fraudulent Return
Any person who deliberately fails to file a return, files a fraudulent return, or attempts to evade the tax in any manner may be liable for a penalty up to $7,500 or imprisonment for a term between three and five years or both.
2007 Form NJ-1040 Line-by-Line Instructions
Name and Address
Place the peel-off label at the front of this booklet in the name and address section at the top of the return. Do not use the label if any of the information is incorrect. If your label contains inaccurate information or you do not have a label, print or type your name (last name first), complete address, and zip code in the spaces provided. Also include your spouse.s/civil union partner.s name if filing jointly. Your refund and next year.s form will be sent to the address you provide. If your legal residence and the address on the return differ, enclose a statement of explanation to avoid a delay in processing.
Social Security Number
Your social security number(s) is not printed on your name and address label. You must enter your social security number(s) in the space provided on the return, one digit in each box. If your filing status is married/CU couple, filing joint return, remember to report both filers . numbers in the order in which the names are listed on the return. If you (or your spouse/civil union partner) do not have a social security number, file Form SS-5 with the Social Security Administration to apply for a social security number. Taxpayers who are not eligible for a social security number must file Form W-7 with the Internal Revenue Service to obtain an individual taxpayer identification number (ITIN). Enter on Form NJ-1040 the same number (social security number or ITIN) that you entered on your Federal income tax return. If you applied for but have not received an ITIN by the return due date, enclose a copy of your Federal Form W-7 application with your New Jersey income tax return.
County/Municipality Code
Check the county/municipality code on your label (see example below). Do not use the label if any of the information is incorrect. If your label contains inaccurate information or you do not have a label, enter your four-digit code, one digit in each box, from the table on page 51. This code identifies the county and municipality of your current residence. The county and municipality codes in these instructions are for Division of Taxation purposes only.
If the local name of the place where you live is not listed, enter the code for the municipality where the property taxes were paid on your dwelling. (Go to www.state.nj.us/infobank/locality.htm for a listing of local names in the State and the county and municipality in which they are located.)
NJ Residency Status
If you were a New Jersey resident for only part of the taxable year, list the month, day, and year your residency began and the month, day, and year it ended. All months should be listed as two-digit numbers with the digits 01 for January, 02 for February, 03 for March, etc. Place the correct number for the beginning and ending months directly in the boxes containing the letter .M,. one digit in each box. The days of the months should be listed as two-digit numbers beginning with the digits 01 for the first day of the month and ending with the digits 31 for the last day of the month. Place the correct number for the beginning and ending dates directly in the boxes containing the letter .D,. one digit in each box. For calendar year filers the year should be entered as 07 and the numbers placed directly in the boxes containing the letter .Y,. one digit in each box. Fiscal year filers should enter the appropriate year in the .Y. boxes.
Filing Status (Lines 1 - 5)
In general, you must use the same filing status on your New Jersey return as you do for Federal income tax purposes, unless you are a partner in a civil union. Indicate the appropriate filing status. Fill in only one oval.
New for 2007. The Civil Union Act (P.L. 2006, c.103) established civil unions in New Jersey for couples of the same sex. Effective for tax years beginning on or after January 1, 2007, partners to a civil union recognized under New Jersey law must file their New Jersey income tax returns using the same filing statuses accorded spouses under New Jersey Gross Income Tax Law. Partners to a civil union may not use the filing status single. Any reference in this booklet to a spouse also refers to a partner to a civil union (CU) recognized under New Jersey law. More information on civil unions, including legally sanctioned same-sex relationships established outside New Jersey , can be found on the Division.s Web site (www.state.nj.us/ treasury/taxation/).
Single. Your filing status is single if you are unmarried or not a partner in a civil union on the last day of the tax year, and you do not qualify for head of household or qualifying widow(er)/surviving CU partner status (see page 17).
Married/Civil Union Couples. If a married couple files a joint Federal income tax return, they must also file a joint New Jersey income tax return. If spouses file separate Federal returns, separate State returns must also be filed. However, if you are a civil union couple, your filing status for New Jersey will not match your Federal filing status for the year. If during the entire taxable year one spouse/civil union partner was a resident and the other a nonresident, the resident may file a separate New Jersey return. The resident computes income and exemptions as if a Federal married, filing separate return had been filed. The spouses/civil union partners have the option of filing a joint return, in which case their joint income would be taxed as if both were residents.
If you are filing separately, be sure to enter the social security number of your spouse/civil union partner in the boxes provided at the top of the tax return.
NOTE : You may file jointly or separately only if you were married or a partner in a civil union on the last day of the tax year.
Head of Household. If you meet the requirements to file as head of household for Federal income tax purposes, you may file as head of household for New Jersey . Certain married individuals/civil union partners living apart may file as head of household for New Jersey if they meet the requirements to file as head of household for Federal purposes.
Qualifying Widow(er)/Surviving CU Partner. If your spouse/civil union partner died during the year, you may file a joint return for the two of you provided you did not remarry or enter into a new civil union before the end of the year. You may be eligible to use the filing status .qualifying widow(er)/surviving CU partner. for each of the two tax years after the year in which your spouse/civil union partner died if you pay more than one-half of the cost of keeping up a home for yourself and at least one child, stepchild, adopted child, or foster child who qualifies as your dependent.
Domestic Partners. If you were a member of a domestic partnership registered in New Jersey, you are not considered to be married or in a civil union. Do not use either the joint or separate filing statusesat Lines 2 and 3.
For more information on filing status, request Tax Topic Bulletin GIT-4, Filing Status.
Exemptions - Personal
Line 6 - Regular Exemptions
As a taxpayer you may claim a personal exemption for yourself, even if you are a minor who is claimed as a dependent on your parents. return. For your convenience, .Yourself. is already filled in. If you are married or in a civil union and filing a joint return, fill in the spouse/CU partner oval as well.
If you were a member of a domestic partnership that was registered in New Jersey on the last day of the tax year, you may claim an exemption for your domestic partner only if he or she does not file a New Jersey income tax return. You must enclose a copy of your New Jersey Certificate of Domestic Partnership the first time you claim the exemption, and you may be asked to provide additional information at a later date. If you are claiming this exemption, fill in the domestic partner oval.
Add the number of ovals filled in and enter the result in the box on Line 6.
Line 7 - Age 65 or Older
If you were 65 years of age or older on the last day of the tax year, you are eligible for an additional exemption. If you are filing a joint return, an additional exemption is also available if your spouse/civil union partner was 65 years of age or older on the last day of the tax year. This exemption is not available for a domestic partner or for your dependents. You must enclose proof of age such as a copy of a birth certificate, driver.s license, or church records with your return the first time you claim the exemption(s). Fill in the appropriate oval(s). Add the number of ovals filled in and enter the result in the box on Line 7.
Line 8 - Blind or Disabled
If you were blind or disabled on the last day of the tax year, you are eligible for an additional exemption. If you are filing a joint return, an additional exemption is also available if your spouse/civil union partner was blind or disabled on the last day of the tax year. This exemption is not available for a domestic partner or for your dependents. .Disabled. means total and permanent inability to engage in any substantial gainful activity because of any physical or mental impairment, including blindness. You must enclose a copy of the doctor.s certificate or other medical records with your return the first time you claim the exemption(s). This information need not be submitted each year providing there is no change in your condition. Fill in the appropriate oval(s). Add the number of ovals filled in and enter the result in the box on Line 8.
Exemptions - Dependency
Line 9 - Dependent Children
You may claim an exemption for each dependent child who qualifies as your dependent for Federal income tax purposes. Enter the number of your dependent children in the box on Line 9.
Line 10 - Other Dependents
You may claim an exemption for each other dependent who qualifies as your dependent for Federal income tax purposes. Enter the number of your other dependents in the box on Line 10.
Line 11 - Dependents Attending Colleges
You may claim an additional exemption for each dependent claimed on Line 9 or 10 who is under age 22, a full-time student at an accredited college or postsecondary institution, and for whom you paid one-half or more of the tuition and maintenance costs. Financial aid received by the student is not calculated into your cost when totaling one-half of your dependent.s tuition and maintenance.
However, the money earned by students in College Work Study Programs is income and is taken into account. This exemption is not available to you or your spouse/civil union partner or your domestic partner.
Requirements
- Student must be under 22 years of age for the entire tax year.
- Student must attend full-time. .Fulltime . is determined by the institution.
- Student must spend at least some part of each of five calendar months of the tax year at school.
- The educational institution must maintain a regular faculty and curriculum and have a body of students in attendance.
Enter the number of exemptions for your qualified dependents attending colleges in the box on Line 11.
Line 12 - Totals
Add Lines 6, 7, 8, and 11 and enter the total in the box on Line 12a. Add Lines 9 and 10 and enter that total in the box on Line 12b.
Line 13 - Dependents' Information
TIP: You must enter on Line 13 the full name, social security number, and year of birth for each dependent child or other dependent claimed on Lines 9 and/or 10. If you have more than four dependents, enter the required information for the first four dependents on Lines 13a - d and enclose a statement with the return listing the information for the additional dependents .
The dependents you list must be the same persons who qualify as your dependent children or other dependents for Federal income tax purposes. Enter the same social security number, individual taxpayer identification number (ITIN), or adoption taxpayer identification number (ATIN) for each dependent that you entered on your Federal return. To obtain an ATIN, file Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the Internal Revenue Service. See page 16 for information on obtaining a social security number or ITIN.
NOTE : If you qualify for the New Jersey earned income tax credit (see the instructions for Line 50) and you listed a .qualifying child. on your Federal Schedule EIC who is not claimed as your dependent for New Jersey purposes, you must enter on Line 13 the child.s name, social security number, and birth year.
Gross Income includes the following:
New Jersey gross income also includes the following which are not subject to Federal income tax:
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Gubernatorial Elections Fund
The Gubernatorial Elections Fund, financed by taxpayer designated $1 contributions, provides partial public financing to qualified candidates for the office of Governor of New Jersey. With its contribution and expenditure limits, the Gubernatorial Public Financing Program has since 1977 assisted 63 candidates to conduct their campaigns free from the improper influence of excessive campaign contributions. Operation of the program has also permitted candidates of limited financial means to run for election to the State.s highest office. As a condition of their receipt of public financing, candidates must agree to participate in two debates which provide the public with an opportunity to hear the views of each candidate. For more information on the Gubernatorial Public Financing Program, contact the New Jersey Election Law Enforcement Commission at 1-888-313-ELEC (toll-free within New Jersey) or 609-292-8700 or write to:
NJ ELECTION LAW ENFORCEMENT C MMISSION
PO BOX 185
TRENTON NJ 08625-0185
Lists of contributors to gubernatorial candidates and copies of reports filed by gubernatorial candidates may be viewed on the Election Law Enforcement Commission Web site at: www.elec.state.nj.us.
Participation in the $1 income tax checkoff protects the continuity and integrity of the Gubernatorial Elections Fund by providing that funds will be reserved for future gubernatorial elections thereby deterring the use of needed funding for other purposes. If you want to designate $1 to go to help candidates for governor pay campaign expenses, fill in the .Yes. oval in the Gubernatorial Elections Fund section of the return. If you are filing a joint return, your spouse/civil union partner may also designate $1 to this fund. Filling in the .Yes. oval will not in any way increase your tax liability or reduce your refund.
Income (Lines 14 - 25)
Gross income means all income you received in the form of money, goods, property, and services unless specifically exempt by law. As a New Jersey resident you must report all taxable income you receive, whether from New Jersey or not, on your return.
TIP: Important! A net loss in any category of income cannot be reported as such on Form NJ-1040. A loss within one category of income may be applied against other income within the same category. However, a net loss in one category of income cannot be applied against income or gains in another. In the case of a net loss in any category, make no entry on the corresponding line. No carryback or carryover of losses is allowed under New Jersey law.
If you have income that is taxed both by New Jersey and by another jurisdiction outside of New Jersey , you may be eligible for a credit against your New Jersey income tax. See instructions for Schedule A, Credit for Income or Wage Taxes Paid to Other Jurisdiction, on page 40.
Exempt Income Do not include the following income when deciding if you must file a return. These items should not appear anywhere on your form except for tax-exempt interest, which is reported on Line 15b.
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Line 14 - Wages, Salaries, Tips, etc.
Enter the total amount you received during the taxable year from wages, salaries, tips, fees, commissions, bonuses, and other payments received for services performed as an employee. Include all payments you received whether in cash, benefits, or property. Enter the total of State wages, salaries, tips, etc. from all employment both inside and outside New Jersey .
TIP: Be sure to take the figure( s) from the .State wages. box on your W-2(s). See sample W-2 on page 20.
NOTE : The .State wages. figure on W-2(s) you received from employment outside New Jersey may need to be adjusted to reflect New Jersey tax law.
All W-2(s) must be enclosed with your tax return. Do not staple W-2(s) to your return. If you have also paid taxes to another jurisdiction on the wages entered on this line, see page 40 for more information.
Pension and annuity income or early retirement benefits should not be included on this line but should be reported on Line 19.
Retirement Plans. Under New Jersey law, contributions to retirement plans (other than 401(k) Plans) are included in the State wages figure on the W-2 in the year the wages are earned. This may cause your State wages figure to be higher than your Federal wages figure.
Meals and/or Lodging. You may exclude from the amount reported on Line 14 meals and/or lodging reported as wages on your W-2 provided that:
- The meals and/or lodging were furnished on the business premises of your employer; and
- The meals and/or lodging were furnished for the convenience of your employer; and
For lodging only:
- You were required to accept the lodging as a condition of your employment.
If you exclude the value of meals and/or lodging from your wages, you must enclose a signed statement explaining how you have met these conditions. If the statement is not enclosed, your wages will be adjusted to represent the full amount shown on your W-2.
Food and maintenance payments made to New Jersey State Police officers as part of their union contract cannot be excluded from gross income. These payments do not meet the criteria above.
Employee Business Expenses. Employee business expenses are not deductible for New Jersey gross income tax purposes. However, you may exclude from the amount reported on Line 14 reimbursements for employee business expenses reported as wages on your W-2 provided that:
- The expenses for which you are reimbursed are job-related expenses;
- You are required to and do account for these expenses to your employer; and
- You are reimbursed by your employer in the exact amount of the allowable expenses.
If you receive excludable reimbursements for employee business expenses which are included in your wages on your W-2, enclose a statement explaining the amount you are excluding and your reasons for excluding this amount. Also enclose a copy of your Federal Form 2106.
Commuter Transportation Benefits. Certain amounts you receive from your employer up to $1,410 for using an alternative means of commuting (such as public transportation, carpools, vanpools, etc.) may be excluded from your New Jersey gross income. Commuter transportation benefits may not be excluded from gross income unless your employer provides those benefits in addition to your regular compensation.
If the commuter transportation benefits you received exceed the maximum excludable amount, the excess amount is taxable and is included in your gross income. Your W-2 form will show both the taxable and nontaxable benefit amounts. The taxable benefits are included in the .State wages. figure on your W-2, while the nontaxable benefits are not. An employee who receives money towards commuter transportation benefits must provide his/her employer with suitable proof (receipts, ticket stubs, etc.) to show that the employer-provided money was used for an alternative means of commuting.
Federal Statutory Employees. If you are considered a .statutory employee. for Federal income tax purposes, you may not deduct your business expenses unless you are self-employed or an independentcontractor under New Jersey law. The Federal label of .statutory employee. has no meaning for New Jersey gross income tax purposes. Business expenses may only be deducted from the business income of a self-employed individual. See the instructions for Line 17 (Net Profits From Business).
Moving Expenses. Moving expenses are not deductible for New Jersey gross income tax purposes. However, you may exclude from the amount reported on Line 14 reimbursements for the following moving expenses if the Federal requirements to claim moving expenses were met and the expenses were included in wages on your W-2.
- The cost of moving your household goods and personal effects from the old home to the new home.
- The actual expenses incurred by you for traveling, meals, and lodging when moving you and your family from your old residence to your new residence.
Reimbursements for any other moving expense may not be excluded from income.
If you receive excludable reimbursements for moving expenses which are included in your wages on your W-2, enclose a statement explaining the amount you are excluding and your reasons for excluding this amount. Also enclose a copy of your Federal Form 3903.
Compensation for Injuries or Sickness. Certain amounts received for personal injuries or sickness are not subject to tax. You may exclude from the amount reported on Line 14 such amounts included as wages on your W-2 provided that:
- The payments must be compensation for wage loss which results from absence due to injury or sickness of the employee; and
- The payments must be due and payable under an enforceable contractual obligation under the plan;
- The payments must not relate to sick leave wage continuation, the taking of which is largely discretionary and the payments are made regardless of the reason for absence from work.
If such payments are included in the State wage figure on your W-2, you must file Form NJ-2440 with your New Jersey return to exclude them.
Line 15a - Taxable Interest Income
Report all of your taxable interest from sources both inside and outside of New Jersey on Line 15a. New Jersey taxable interest income includes interest from the following:
- Banks
- Savings and loan associations
- Credit unions
- Savings accounts
- Earnings on nonqualified withdrawals from qualified state tuition program accounts, including the New Jersey Better Educational Savings Trust Program (NJBEST) accounts
- Distributions from Coverdell education savings accounts (ESAs), but only the earnings portion
- Checking accounts
- Bonds and notes
- Certificates of deposit
- Ginnie Maes
- Fannie Maes
- Freddie Macs
- Repurchase agreements
- Life insurance dividends
- Obligations of states and their political subdivisions, other than New Jersey
- Any other interest not specifically exempt
Interest received by your sole proprietorship is reportable as net profits from business on Line 17. Your portion of interest earned and received by a partnership, an estate or trust or, in general, an S corporation is reportable as distributive share of partnership income on Line 20, net income from estates or trusts on Line 25, or net pro rata share of S corporation income on Line 21. For detailed information regarding the reporting of partnership or S corporation income, request Tax Topic Bulletin GIT-9P, Income From Partnerships, or GIT-9S, Income From S Corporations. For information regarding grantor trusts, see the reporting instructions for Line 25 on page 26. Interest paid or deemed to have been paid to you by a partnership or an S corporation and reportable to you on Form 1099 must be included on Line 15a.
Forfeiture Penalty for Early Withdrawal. If you incur a penalty by withdrawing a time deposit early, you may subtract the amount of the penalty from your interest income. If your taxable interest income on Line 15a is more than $1,500, enclose a copy of Schedule B, Federal Form 1040, or Schedule 1, Federal Form 1040A.
Line 15b - Tax-Exempt Interest Income
Report all of your tax-exempt interest, as well as exempt interest dividends from a New Jersey Qualified Investment Fund, on Line 15b. If Line 15b is more than $10,000, you must include an itemized schedule detailing the amount received from each source. New Jersey tax-exempt interest income includes interest from:
- Obligations of the State of New Jersey or any of its political subdivisions
- Direct Federal obligations such as U.S. Savings Bonds and Treasury Bills, Notes, and Bonds
- Earnings on qualified withdrawals from qualified state tuition program accounts, including the New Jersey Better Educational Savings Trust Program (NJBEST) accounts
- Sallie Maes
- CATS
- TIGRs
- Certain distributions from .New Jersey Qualified Investment Funds.
- Distributions paid by mutual funds to the extent the distributions are attributable to interest earned on Federal obligations
New Jersey Qualified Investment Funds. A New Jersey Qualified Investment Fund is a regulated investment company in which at least 80% of the fund.s investments (other than cash or receivables) are obligations issued either directly by the Federal government or the State of New Jersey or any of its political subdivisions. The Fund must certify such status with the Division of Taxation annually.
If you received a distribution from a qualified investment fund, you may exclude from your income only the portion of the distribution which comes from qualified exempt obligations. Although excluded from income, the tax-exempt portion is reported on Line 15b. The taxable portion of the distribution, if any, is reported as dividends on Line 16. By February 15, shareholders should be notified by the New Jersey qualified investment fund of the portion of their distribution that may be excluded from income. Contact your broker to determine whether your fund qualifies.
Do not report interest earned on your IRA(s) on Line 15b, Tax-Exempt Interest Income. If you made a withdrawal from your IRA during the year, see the instructions for Line 19.
When you total your interest income on Lines 15a and 15b, the amount should match the total of the taxable and taxexempt interest you reported on your Federal income tax return (if you filed a Federal 1040). Enclose a statement with your NJ-1040 explaining the difference if the amounts do not match. For more information on tax-exempt interest income, request Tax Topic Bulletin GIT-5, Exempt Obligations.
Line 16 - Dividends
Enter on Line 16 the amount of dividends received during the year from investments (e.g., from stocks, mutual funds) or other income-producing activities which do not constitute a trade or business. The total amount of taxable dividends received, regardless of where earned, must be reported.
Dividends received by your sole proprietorship are reportable as net profits from business on Line 17. Your portion of dividends earned and received by a partnership, an estate or trust or, in general, an S corporation is reportable as distributive share of partnership income on Line 20, net income from estates or trusts on Line 25, or net pro rata share of S corporation income on Line 21. For detailed information regarding the reporting of partnership income or S corporation income and distributions, request Tax Topic Bulletin GIT-9P, Income From Partnerships, or GIT-9S, Income From S Corporations. For information regarding grantor trusts, see the reporting instructions for Line 25 on page 26.
Capital Gains Distributions. Capital gains distributions you receive from mutual funds or other regulated investment companies are reported on Line 2, Schedule B and are not to be included on Line 16 as dividends.
Tax-Free Distributions. A distribution which is a return of your investment or capital and does not come from earnings or profits is a nontaxable capital or taxfree distribution. These distributions reduce the basis of the stock or investment and are not taxable until your investment is fully recovered.
Insurance Premiums. Dividends received from insurance companies are not taxable unless the dividends received exceed the premiums paid. Any interest from accumulated insurance dividends is taxable and must be reported on Line 15a.
Line 17 - Net Profits From Business
Report the net profits from your business, trade, or profession on Line 17. To determine your New Jersey profit (or loss), first complete a Federal Schedule C (or Schedule C-EZ or Schedule F). Use the same accounting method (cash or accrual) that you used for Federal income tax purposes. In the case of a loss, make no entry on Line 17. Enclose a copy of the Federal Schedule C (or Schedule C-EZ or Schedule F) with your return.
To comply with New Jersey income tax law you must make the following adjustments to your Federal Schedule C (or Schedule C-EZ or Schedule F):
- Add any amount you deducted for taxes based on income.
- Subtract interest you reported on Federal Schedule C (or Schedule C-EZ or Schedule F) which is exempt for New Jersey purposes but taxable for Federal purposes.
- Add interest not reported on Federal Schedule C (or Schedule C-EZ or Schedule F) from states or political subdivisions outside of New Jersey which is exempt for Federal purposes.
- Deduct the remaining 50% of meal and entertainment expenses (that were disallowed on the Federal return).
- Deduct your qualified contributions to a self-employed 401(k) plan. Contributions to a plan in excess of the Federal limits, which are not an allowable deduction for Federal tax purposes, are also not deductible for New Jersey purposes.
- Add interest and dividends derived in the conduct of a trade or business.
- Add or subtract income or losses derived in the conduct of a trade or business from rentals, royalties, patents, or copyrights.
- Add or subtract gains or losses from the sale, exchange, or other disposition of the trade or business.s property.
- Add or subtract the net adjustment from the Gross Income Tax Depreciation Adjustment Worksheet GIT-DEP, Part 1, line 7. Be sure to retain the completed worksheet for your records. See page 63 for how to request Worksheet GIT-DEP and instructions.
- Subtract the New Jersey allowable IRC Section 199 deduction, which must be calculated on Form 501-GIT, Domestic Production Activities Deduction. Form 501-GIT can be found on the Division.s Web site (www.state.nj.us/treasury/taxation/).
Sole proprietors engaged in providing .primary care. medical and/or dental services at a qualified practice located in or within five miles of a designated Health Enterprise Zone (HEZ) may qualify for a deduction on Line 33. For information on eligibility requirements and how to calculate the HEZ deduction, see Technical Bulletin TB-56, Health Enterprise Zones, which is available on the Division.s Web site (www.state.nj.us/treasury/taxation/).
Line 18 - Net Gains or Income From Disposition of Property
Enter on Line 18 the amount of net gains from New Jersey Schedule B, Line 4. Enclose Schedule B with your return. See page 44.
Line 19 - Pensions, Annuities, and IRA Withdrawals
Pensions, annuities, and certain IRA withdrawals are taxable on the New Jersey return and must be reported on Line 19, although the taxable amount may differ from the Federal amount. (See page 25 for information on Roth IRAs.)
TIP: If you (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older or disabled and met the other requirements, you may be able to use the pension and other retirement income exclusions to reduce your gross income. See the instructions for Line 27a on page 27 and Line 27b on page 28.
All state and local government, teachers., and Federal pensions, and Keogh Plans are treated in the same manner as pensions from the private sector. Amounts received as .early retirement benefits. and amounts reported as pension on Schedule NJK-1, Partnership Return Form NJ-1065 are also taxable. Social Security and Railroad Retirement benefits are exempt from New Jersey income tax and should not be reported as pension income. Pension payments received by reason of total and permanent disability are also exempt. However, if you retired before age 65 on a total and permanent disability pension and continue to receive pension payments after age 65, your disability pension is then treated as an ordinary pension. (See definition of .disabled. on page 17.)
If you are receiving a United States military pension or survivor.s benefit payments, the military pension or survivor.s benefit is not taxable for New Jersey gross income tax purposes, regardless of your age or disability status. Do not include such payments on Line 19, Form NJ-1040.
Military pensions are those resulting from service in the Army, Navy, Air Force, Marine Corps, or Coast Guard. This exemption does not apply to civil service pensions or annuities, even if the pension or annuity is based on credit for military service. Most military pensions and survivor.s benefit payments are received from the U.S. Defense Finance and Accounting Service while a civil service annuity is received through the U.S. Office of Personnel Management.
Retirement plans (pensions, annuities, IRAs) are either noncontributory or contributory. A noncontributory plan is one to which you have not made contributions. A contributory plan is one to which you have made contributions, usually through payroll deductions. The amount you report on Line 19 will depend on whether or not you made contributions to the plan.
Noncontributory Plans. Amounts you receive from noncontributory plans are fully taxable. Enter on Line 19 the total amount of the pension or annuity from your 1099-R.
Contributory Plans (Other Than IRAs). The total value of your pension or annuity consists of your contributions, your employer.s contributions (if any), and earnings. In general, your contributions to a pension or annuity were taxed when they were made and are not taxed by New Jersey when withdrawn (except for 401(k) Plans). Therefore, you must determine the taxable part of any distribution you receive. Use Worksheet A above to determine whether you should use the Three-Year Rule Method or the General Rule Method for your pension or annuity.
NOTE :
- If you received a distribution from a 401(k) Plan, see the section on 401(k) Plans on page 24 before continuing.
- The taxable amount of an IRA withdrawal must be determined by completing Worksheet C, IRA Withdrawals, on page 25. Do not use Worksheet A or B for an IRA withdrawal.
Worksheet A Which Pension Method to Use 1. Amount of pension you will receive during the first three 2. Your contributions to the plan .............................................. 2. _____________ 3. Subtract line 2 from line 1 .................................................... 3. _____________
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Three-Year Rule Method. If you will recover your contributions within three years from the date you receive the first payment from the plan, and both you and your employer contributed to the plan, you may use the Three-Year Rule Method to determine your New Jersey taxable pension income. The Three-Year Rule allows you to exclude your pension and annuity payments from gross income until the payments you receive equal your contributions to the plan. Until that time, the amounts you receive, because they are considered your contributions, are not taxable and should not be reported on your return. Once you have received (recovered) an amount equal to the amount you contributed, the payments you receive are fully taxable. Since the Three- Year Rule has been repealed for Federal income tax purposes, if you retired after July 1, 1986, the taxable amount of pension or annuity that you report on your New Jersey return when using this method will differ from the amount you report on your Federal return.
General Rule Method. If you will not recover your contributions within three years from the date you receive the first payment from the plan, or your employer did not contribute to the plan, you must use the General Rule Method to determine your New Jersey taxable pension income. From the first year you receive your pension and every year thereafter, part of your pension will be excludable (the amount that represents your contributions) and part will be taxable. Use Worksheet B below to determine the taxable amount. Complete Worksheet B the year in which you receive your first pension payment. Once calculated, use the percentage on line 3 to determine the taxable amount year after year. You must recalculate the percentage only if your annual pension payments decrease.
Contributions to Plans Prior to Residence. Any contributions you made to a pension, annuity, or IRA prior to moving to New Jersey are treated in the same way as the contributions would have been treated had you resided in New Jersey at the time. Contributions to plans other than 401(k) Plans are considered to have been previously taxed. Use the appropriate method to determine the taxable amount.
Lump-Sum Distributions and Rollovers. When a lump-sum distribution of the entire balance from a qualified employee pension, annuity, profit-sharing, or other plan is made, the amount received in excess of the contributions to the plan that have already been taxed must be included in your income in the year received. New Jersey has no provisions for income averaging of lump-sum distributions. Report the taxable amount of a lump-sum distribution on Line 19.
A lump-sum distribution from an IRA or a qualified employee pension or annuity plan which you roll over into an IRA or other eligible plan is excludable from New Jersey income if the rollover qualifies for deferral for Federal income tax purposes. The amount rolled over (minus previously taxed contributions) is taxable later when it is withdrawn. As under Federal law, the rollover must be made within the 60-day period after distribution.
401(k) Plans. Beginning on January 1, 1984, New Jersey.s treatment of 401(k) Plan contributions changed. After that date employee contributions to 401(k) Plans were no longer included in taxable wages when earned. If you made contributions to your 401(k) Plan prior to January 1, 1984, your distribution will be treated differently than if you made all of your contributions after this date.
- All contributions made after January 1, 1984. If all of your contributions to the 401(k) Plan were made after January 1, 1984, then your distributions from the plan are fully taxable unless your contributions exceeded the Federal limit.
- Contributions made before January 1, 1984. If you made contributions to the 401(k) Plan before January 1, 1984, or you made contributions beyond the Federal limit, calculate the taxable portion of your distributions from the plan using one of the methods described under contributory plans.
For more detailed information on reporting pension and annuity income on your New Jersey return, request Tax Topic Bulletin GIT-1, Pensions and Annuities.
Worksheet B - General Rule Method 1. Your previously taxed contributions to the plan .................. 1. _____________ 2. Expected return on contract* ............................................. 2. _____________ 3. Percentage excludable (Divide line 1 by line 2) .................. 3. _____________% 4. Amount received this year ................................................. 4. _____________ 5. Amount excludable (Multiply line 4 by line 3) .................... 5. _____________ 6. Taxable amount (Subtract line 5 from line 4. * The expected return on the contract is the amount receivable. If life expectancy is a factor under your plan, Federal actuarial tables must be used to compute the expected return. The Federal actuarial tables are contained in the Internal Revenue Service.s Publication 939, General Rule for Pensions and Annuities. Contact the IRS for this publication. If life expectancy is not a factor under your plan, the expected return is found by totaling the amounts to be received. |
IRAs. Your IRA consists of a nontaxable part (your contributions) and a taxable part (earnings plus certain amounts, if any, rolled over from pension plans). If your contributions have been previously taxed, only the portion of your distribution that represents earnings is taxable.
Earnings credited to an IRA are not subject to tax until withdrawn. The interest, dividends and other earnings, as well as amounts which were tax-free rollovers, will become taxable when withdrawn. If the total amount in the IRA is withdrawn, the entire amount of the interest or accumulated gains becomes taxable in the year the withdrawal is made.
If, however, the withdrawal from an IRA is made over a period of years, the portion of the annual distribution that represents interest income and accumulated gains in the IRA is subject to tax. A distribution from a rollover IRA which is fully taxable for Federal income tax purposes may be treated differently for New Jersey purposes if your contributions were subject to New Jersey income tax when the contributions were made.
Worksheet C - IRA Withdrawals 2007 Part I 1. Value of IRA on 12/31/07. Include contributions 2. Total distributions from IRA during the tax 3. Total value of IRA. Add lines 1 and 2 .......................... 3. ________ Unrecovered Contributions: Complete either line 4a or 4b: 4a . First year of withdrawal from IRA: Enter the 4b. After first year of withdrawal from IRA: 5. Accumulated earnings in IRA on 12/31/07. 6. Divide line 5 by line 3 and enter the result as a decimal ........ 6. ________ 7. Taxable portion of this year.s withdrawal. Multiply Part II.Unrecovered Contributions:(For Second and Later Years) (a) Last year.s unrecovered contributions. From (b) Amount withdrawn last year. From (c) Taxable portion of last year.s withdrawal. From (d) Contributions recovered last year. (e) This year.s unrecovered contributions. (f) Contributions to IRA during current (g) Total unrecovered contributions. Line (e) *If you did not complete a worksheet in prior year(s), skip Part II and calculate the amount of unrecovered contributions as follows:
This is the amount of unrecovered contributions to enter on line 4b of Part I. (Keep a copy of this worksheet for your records.)
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Report the taxable amount of an IRA withdrawal on Line 19. Use Worksheet C above to determine the taxable portion of your IRA withdrawal. For multiple IRAs, the taxable amount may be determined by using a separate worksheet for each IRA, or all IRAs may be combined on one worksheet.
Roth IRAs. Contributions to a Roth IRA are subject to New Jersey tax in the year they are made. However, if the requirements are satisfied, .qualified distributions . from a Roth IRA are excludable and do not have to be included in New Jersey gross income in the year received. A .qualified distribution. is one made after the five-taxable-year period beginning with the first taxable year in which a ontributionwas made to your IRA, and which is:
- Made on or after the date on which an individual reaches age 59½; or
- Made to a beneficiary (or the individual .s estate) after the individual.s death; or
- Made because the individual becomes disabled; or
- Made as a qualified first-time home buyer distribution as defined by the Internal Revenue Code.
A payment or distribution cannot be treated as a qualified distribution if it is made within the five-taxable-year period which begins with the year the first contribution was made. A payment or distribution of an allowable rollover contribution (or income earned on the amount rolled over) from an IRA other than a Roth IRA, is not a qualified distribution if it is made within the five-taxable-year period which begins with the year in which the rollover contribution was made.
If you received a nonqualified distribution from a Roth IRA, you must report the earnings as income on Line 19.
If you converted an existing IRA to a rollover Roth IRA during tax year 2007, any amount from the existing IRA that would be taxable if withdrawn must be included in your gross income on Line 19.
For more detailed information on IRA withdrawals, request Tax Topic Bulletin GIT-2, IRA Withdrawals, or Technical Bulletin TB-44.
Line 20 - Distributive Share of Partnership Income
Enter on Line 20 your share of income derived from partnership(s) as reported to you by the partnership(s) on Schedule NJK-1, Form NJ-1065. The appropriate amount to enter appears on the schedule in column A of the line labeled .Distributive Share of Partnership Income. and must be reported whether or not the income was actually distributed. If the net amount from all Schedule NJK-1s is zero or less, make no entry. Enclose a copy of each Schedule NJK-1 with your return. For detailed information regarding reporting partnership income, request Tax Topic Bulletin GIT-9P, Income From Partnerships.
If any adjustments to the amount reported on Line 20 are necessary, follow the detailed instructions in Tax Topic Bulletin GIT-9P, Income From Partnerships.
If you did not receive a Schedule NJK-1, you must enclose a copy of the Federal Schedule K-1 and complete Reconciliation Worksheet A contained in Tax Topic Bulletin GIT-9P, Income From Partnerships. Be sure to retain the completed worksheet for your records.
Line 21 - Net Pro Rata Share of S Corporation Income
Enter on Line 21 the amount of your net pro rata share of S corporation income, whether or not the income was actually distributed. For detailed information regarding the reporting of S corporation income, request Tax Topic Bulletin GIT-9S, Income From S Corporations.
Enclose a copy of the Schedule NJ-K-1, Form CBT-100S, which you received from the S corporation. If you did not receive a Schedule NJ-K-1, you must enclose a copy of the Federal Schedule K-1 and complete Reconciliation Worksheet B contained in Tax Topic Bulletin GIT-9S, Income From S Corporations. Be sure to retain the completed worksheet for your records.
Line 22 - Net Gains or Income From Rents, Royalties, Patents, and Copyrights
Enter on Line 22 the amount of net income from New Jersey Schedule C, Line 3. Enclose Schedule C with your return. See page 46.
Line 23 - Net Gambling Winnings
Enter on Line 23 the amount of your net gambling winnings. You may deduct your gambling losses from your winnings that occurred during the same year. You may not use New Jersey Lottery losses to offset other gambling winnings. If your net gambling winnings are less than zero, make no entry.
You must be able to substantiate gambling losses used to offset winnings reported on your New Jersey income tax return. Evidence of losses may take several forms, including a daily log or journal of wins and losses, canceled checks, losing race track pari-mutuel tickets, etc. With respect to winnings or losses resulting from casino gambling, letters from casinos which purport to .rate. the gambling activity of an individual or .estimate . losses are acceptable as part of the evidential material required to prove losses.
Remember, do not include any winnings or losses from the New Jersey State Lottery.
Although no specific rider to the New Jersey income tax return is required to substantiate gambling losses, it is suggested that if you enter gambling winnings net of losses on Line 23 of the return, you should note the total winnings and total losses on a supporting schedule. This procedure may eliminate certain questions in the event the return is selected for audit. Although not taxable, New Jersey Lottery winnings and losses should be listed on the supporting schedule.
Line 24 - Alimony and Separate Maintenance Payments Received
Enter on Line 24 the total amount of alimony and separate maintenance payments you received which were required under a decree of divorce/dissolution or separate maintenance. Do not include payments received for child support.
Line 25 - Other
Enter on Line 25:
Amounts Received as Prizes and Awards. A prize won in a raffle, drawing, television or radio quiz show, contest, or any other event is taxable and must be included on Line 25. Any prizes or awards received in goods or services must be included as income at fair market value.
Income in Respect of a Decedent. If you had the right to receive income that the deceased person would have received had he or she lived, and the income was not included on the decedent.s final return, you must report the income on your own return when you receive it. The income is reported on Line 25, .Other. income. Enclose a schedule of the items of income reported together and included on Line 25.
Income From Estates and Trusts. Beneficiaries receiving income from an estate or trust must include on Line 25 the Total Distribution reported on Schedule NJK-1, Form NJ-1041. If a Schedule NJK-1 was not received, include on Line 25 the net of the items listed on the Federal K-1 received. Interest, dividends, capital gains, business or partnership income, etc. as listed on the Federal K-1(s) must be adjusted to reflect New Jersey tax law and then netted together before inclusion on Line 25, .Other. income. Be sure to include income which is not subject to Federal income tax but is subject to New Jersey gross income tax, such as interest from and losses on the disposition of obligations of states and their political subdivisions, other than New Jersey and its political subdivisions, and exclude income and losses not subject to New Jersey tax, such as gains on New Jersey tax-exempt securities.
For tax years beginning on or after January 1, 2004, New Jersey income tax law has uncoupled from certain changes in Federal depreciation and expense deduction limits. The Gross Income Tax Depreciation Adjustment Worksheet GIT-DEP instructions explain the New Jersey adjustments required to determine income reportable in the various net income categories. See page 63 for how to request Worksheet GIT-DEP and instructions.
For taxable years beginning on or after December 31, 2004, New Jersey income tax law has uncoupled from some provisions of the IRC Section 199 deduction. Information regarding the New Jersey limitations and calculations can be found on the Division.s Web site (www.state.nj.us/treasury/taxation/).
Enclose a copy of the NJK-1(s) or Federal K-1(s).
If the income from a grantor trust is reportable by or taxable to the grantor for Federal income tax purposes, it is also taxable to the grantor for New Jersey gross income tax purposes. The grantor must report the interest, dividends, capital gains, business income, partnership income, net pro rata share of S corporation income, etc. in the categories of income as required for gross income tax purposes and not as income from Estates and Trusts. Enclose a copy of the New Jersey or Federal Grantor Trust Attachment.
Scholarships and Fellowships. Scholarships and fellowship grants are taxable and must be included on Line 25 unless they satisfy all of the following conditions:
- The primary purpose of the grant is to further the recipient.s education or training; and
- The grant neither represents payments for past, present, or future services nor payments for services which are subject to the direction or supervision of the grantor (e.g., a fellowship given in exchange for teaching); and
- The grant is not for the benefit of the grantor.
Residential Rental Value or Allowance Paid by Employer. Enter on Line 25 either the rental value of a residence furnished by an employer or the rental allowance paid by an employer to provide a home. The rental value of the residence furnished is excludable and should not be reported provided that: 1. The lodging is provided on the business premises of the employer; and 2. The lodging is furnished for the convenience of the employer; and 3. The employee is required to accept such lodging as a condition of employment.
Other. Enter on Line 25 the amount of any taxable income for which a place has not been provided elsewhere on the return. Income from sources both legal and illegal is subject to tax.
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Line 26 - Total Income
Enter on Line 26 the total of Lines 14, 15a, 16, 17, 18, 19, 20, 21, 22, 23, 24, and 25.
Line 27a - Pension Exclusion
You qualify for the New Jersey pension exclusion if:
- You (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older or disabled as defined by Social Security guidelines on the last day of the tax year; and
- Total income from Line 26 for the entire year was $100,000 or less.
NOTE : If the amount on Line 26 is more than $100,000, you are not eligible for the pension exclusion. You may still be eligible for a special exclusion of up to $6,000. See the instructions for Line 27b on page 28 to determine if you qualify for this special exclusion.
If you qualify for the pension exclusion, you may exclude all or a part of the income you received during the year from taxable pensions, annuities, and IRA withdrawals. You may exclude up to $20,000 (filing status married/CU couple, filing joint return), $15,000 (filing status single, head of household, or qualifying widow(er)/surviving CU partner), or $10,000 (filing status married/CU partner, filing separate return).
Enter on Line 27a the lesser of the amount reported on Line 19 or the amount next to your filing status from the Maximum Pension Exclusion chart above. The amount on Line 27a should never be more than the amount on Line 19. Partyear residents, see page 9.
When you and your spouse/civil union partner file a joint return and only one of you is disabled or 62 years of age or older, you may still claim the maximum pension exclusion. However, only the pension, annuity, or IRA withdrawal of the spouse/ civil union partner who is 62 years of age or older or disabled may be excluded.
TIP: If you and/or your spouse/ civil union partner were 62 years of age or older on the last day of the tax year and did not use the maximum pension exclusion amount for your filing status, or you did not use the pension exclusion because you did not report any income on Line 19, you may still qualify for other income exclusions. See the instructions for Line 27b, .Other Retirement Income Exclusion..
Line 27b - Other Retirement Income Exclusion
If you (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older on the last day of the tax year, you may qualify to exclude other income on Line 27b. There are two parts to the total exclusion: Part I, the unclaimed portion of your pension exclusion, and Part II, a special exclusion for taxpayers who are unable to receive Social Security or Railroad Retirement benefits. Each part has different eligibility requirements.
Use Worksheet D to calculate the total exclusion amount you are eligible to claim. If you were a part-year resident, do not complete the worksheet. See page 9.
I. Unclaimed Pension Exclusion. You are eligible to use the unclaimed portion of your pension exclusion on Line 27b if:
- You (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older on the last day of the tax year; and
- Total income from Line 26 for the entire year was $100,000 or less; and
- Income from wages, net profits from business, distributive share of partnership income, and net pro rata share of S corporation income totaled $3,000 or less; and
- You did not use the maximum pension exclusion on Line 27a (your taxable pension, annuity or IRA withdrawal was less than the exclusion amount for your filing status or you did not receive pension, annuity, or IRA withdrawal income).
II. Special Exclusion for Taxpayers Unable to Receive Social Security or Railroad Retirement Benefits. This benefit is not related to the pension exclusion and, if you qualify, you may claim it whether or not you use the maximum pension exclusion. You qualify for this additional exclusion on Line 27b if:
- You (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older on the last day of the tax year; and
- You (and your spouse/civil union partner if filing jointly) are unable to receive Social Security or Railroad Retirement benefits, but would have been eligible for benefits had you fully participated in either program.
Worksheet D Part I . Unclaimed Pension Exclusion Is total income from Line 26, NJ-1040 for the entire year MORE than $100,000? Yes. Do not complete Part I. Enter .0. on line 8 and continue with Part II. No. Continue with line 1. 1. Enter the amount from Line 14, NJ-1040 ............................. 1. __________ 2. Enter the amount from Line 17, NJ-1040 ............................. 2. __________ 3. Enter the amount from Line 20, NJ-1040 ............................. 3. __________ 4. Enter the amount from Line 21, NJ-1040 ............................. 4. __________ 5. Add lines 1, 2, 3, and 4 ......................................................... 5. __________ Is the amount on line 5 MORE than $3,000?
6. Enter: if your filing status is: $20,000 Married/CU couple, filing joint return $15,000 Single; Head of household; Qualifying widow(er)/ surviving CU partner $10,000 Married/CU partner, filing separate return .................. 6. __________ 7. Enter the amount from Line 27a, NJ-1040 ........................... 7. __________ 8. Unclaimed Pension Exclusion. Subtract line 7 from line 6. If zero, enter .0.. Continue with Part II ...................................... 8. __________ |
Part II . Special Exclusion 9a. Are you (and/or your spouse/civil union partner if filing jointly) now receiving, or will you (and/or your spouse/civil union partner if filing jointly) ever be eligible to receive Social Security or Railroad Retirement Benefits? No . Continue with item 9b Yes . Enter .0. on line 9 and continue with line 10 9b. Would you (and your spouse/civil union partner if filing jointly) be receiving or ever be eligible to receive Social Security or Railroad Retirement Benefits if you had participated in either program? No . Enter .0. on line 9 and continue with line 10 Yes . Enter on line 9 the amount of exclusion for your filing status shown below and continue with line 10 Enter: if your filing status is: $ 6,000 Married/CU couple, filing joint return; Head of household; Qualifying widow(er)/surviving CU partner $ 3,000 Single; Married/CU partner, filing separate return .... 9. __________ 10. Your Other Retirement Income Exclusion Add lines 8 and 9. Enter here and on Line 27b, NJ-1040. |
NOTE : When you and your spouse/civil union partner file a joint return and only one of you is 62 years of age or older, you may claim the full exclusion. However, only the income of the spouse/civil union partner who is age 62 or older may be excluded. For more detailed information on using the income exclusions on Line 27b, request Tax Topic Bulletin GIT-1, Pensions and Annuities.
Line 27c - Total Exclusion Amount
Add Line 27a and Line 27b and enter the total on Line 27c.
Line 28 - New Jersey Gross Income
Subtract Line 27c from Line 26 and enter the result on Line 28. If less than zero, make no entry.
TIP: If you were a New Jersey resident for the entire year and your Gross Income on Line 28 is $20,000 or less ($10,000 if filing status is single or married/CU partner, filing separate return), you have no tax liability to New Jersey and no return must be filed. If you are filing a return only to obtain a refund of taxes withheld or estimated payments made, do not complete Lines 29 through 43. Continue completing the return with Line 44. See instructions on page 36.
N OTE : If you qualify, you may receive a New Jersey earned income tax credit even if you have no tax liability to New Jersey and are not required to file a return. See the instructions for Line 50. If you are eligible for a 2007 homestead rebate as a tenant (see page 46), you must also complete the rebate application, Form TR-1040.
You may claim an exemption from withholding if you expect to have no New Jersey income tax liability for the taxable year because your gross income will be less than the minimum income filing threshold. Complete Form NJ-W4 and submit it to your employer to claim the exemption.
If you were a New Jersey resident for only part of the year, see .Guidelines for Part-Year Residents. on page 9.
Exemptions and Deductions (Lines 29 - 34)
New Jersey allows deductions only for exemptions, certain medical expenses, qualified Archer medical savings account (MSA) contributions, health insurance costs of the self-employed, alimony and separate maintenance payments, qualified conservation contributions, and a health enterprise zone deduction for qualified taxpayers. No deduction is allowed for adjustments taken on the Federal return such as employee business expenses, IRA contributions, and Keogh Plan contributions. However, be sure to keep records of all contributions to IRAs and Keogh Plans. You will need this information when you make withdrawals in future years. Part-year residents must follow the guidelines on page 9.
Line 29 - Total Exemption Amount
Calculate your total exemption amount as follows:
From Line 12a × $1,000 = ________
From Line 12b × $1,500 = ________
Total Exemption Amount ________
Enter the number of exemptions from Line 12a, Form NJ-1040. Multiply the number by $1,000 and enter the result.
Enter the number of exemptions from Line 12b, Form NJ-1040. Multiply the number by $1,500 and enter the result.
Add together the exemption amounts calculated above and enter the total on Line 29, Form NJ-1040.
Worksheet E
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Line 30 - Medical Expenses
You may deduct certain medical expenses that you paid during the year for yourself, your spouse/civil union partner or domestic partner, and your dependents. However, you cannot deduct expenses for which you were reimbursed. Only expenses in excess of 2% of your income may be deducted. You may also deduct qualified Archer MSA contributions. Use Worksheet E to calculate your deduction for medical expenses/Archer MSA contributions.
Allowable Medical Expenses. Medical expenses means nonreimbursed payments for physicians, dental and other medical fees, prescription eyeglasses and contact lenses, hospital care, nursing care, medicines and drugs, prosthetic devices, X-rays, and other diagnostic services conducted by or directed by a physician or dentist. In addition, medical expenses may also include amounts paid for transportation primarily for and essential to medical care and insurance (including amounts paid as premiums under Part B of Title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care. As a general rule, medical expenses allowed for Federal income tax purposes will be allowed for New Jersey income tax purposes.
NOTE : Do not include on line 1, Worksheet E
- Contributions you made to an Archer MSA or any amounts paid or disbursed from an Archer MSA that have been excluded from gross income; or
- Any amounts taken as a deduction on line 5, Worksheet E, for the health insurance costs of the self-employed.
Archer MSA Contributions. Enter on line 4, Worksheet E the amount of your qualified Archer MSA contributions from Federal Form 8853. New Jersey follows the Federal rules for this deduction. Your contribution may not exceed 75% of the amount of your annual health plan deductible (65% if you have a self-only plan). Enclose Federal Form 8853 with your return. Excess contributions that yo