New Jersey Form NJ-1040 - Income Tax-Resident Return Instructions

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 and deductions are subtracted. It does not include nontaxable benefits. See page 21 to find out which types of income are not taxable.
  • Members of the Armed Forces (and their spouses) see page 11 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).

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 *
You must file a New Jersey income tax return if-

Your residency status is:

your filing 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:

  • New Jersey was your domicile (permanent legal residence) for the entire year; or
  • New Jersey was not your domicile, but you maintained a permanent* home in New Jersey for the entire year and you spent more than 183 days in New Jersey. (Members of the Armed Forces stationed here and their spouses/civil union partners who are not domiciled in New Jersey are not residents under this definition.)
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:

New Jersey was not your domicile, and you spent 183 days or less here; or

New Jersey was not your domicile, you spent more than 183 days here, but you did not maintain a permanent* home here.

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:

  • You did not maintain a permanent home in New Jersey; and
  • You did maintain a permanent home outside of New Jersey; and
  • You did not spend more than 30 days in New Jersey.
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 2010 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

Other Filing Information though 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 retire ment 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.

AVOIDING COMMON MISTAKES

Check the following items to avoid delays in processing returns and refunds.

  • Use the correct form. Form NJ-1040 should be used by part-year residents as well as full-year residents. Use only a 2010 return for the 2010 tax year.
  • Read the instruction booklet before completing the return.
  • Use only blue or black ink when completing forms.
  • Enter all numbers within the boxes. Do not use dollar signs or dashes.
  • You may not report a loss on Form NJ-1040. Make no entry on lines where the amount to be reported is zero or less, except for Line 44, Use Tax Due. If no use tax is owed, enter “0.00” on Line 44.
  • Make no entry on unused lines.
  • When rounding, enter zeros after the decimal point for cents.
  • Check name, address, social security number, and county/municipality code for accuracy.
  • Enter last name first when writing information on the tax return. This requirement differs from the Federal return.
  • Fill in only one oval for your filing status.
  • Use “State wageS” figure(s) from Box 16 of your W-2(s), NOT Federal wages figure(s). If you received wages from sources outside New Jersey, this figure may need to be adjusted to reflect New Jersey tax law.
  • Enclose all W-2(s) with your return. Also enclose 1099-R(s) and 1099-MISC(s) that indicate NJ withholdings.
  • Locate the correct column for your filing status in the Tax Table when calculating your New Jersey tax liability on Line 38.
  • Request a refund by completing Line 65.
  • Check your math.
  • Sign and date your return. Both spouses/civil union partners must sign a joint return.
  • Keep a copy of your return and all supporting documents or schedules.
  • Changes or mistakes to your original return may be corrected by filing an amended return. See page 15.

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 distributive share 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 29 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.

Line 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 * Mos. NJ Resident/ 12. = Line 29

See the instructions for Line 29 on page 30 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 31 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 you and your spouse/civil union partner file separate returns but maintain the same principal residence) 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 you and your spouse/ civil union partner file separate returns but maintain the same principal residence) at line 8, Worksheet F or line 5, Worksheet H.

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.

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.

TIP: Military pensions are exempt from New Jersey gross income tax, regardless of your age or disability status. See instructions for Line 19 on page 24.

A member of the Armed Forces whose home of record is New Jersey and who is stationed outside the State (whether living aboard ship, 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-ofpocket 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.

TIP: Spouses/Civil Union Partners of Military Personnel. Beginning with tax year 2009, Federal law, known as the Military Spouses Residency Relief Act (P.L. 111-97), allows a military servicemember's nonmilitary spouse/civil union partner to keep a tax domicile while moving from state to state, as long as he or she moves into a state to be with a spouse/ civil union partner who is in the state on military orders. Nonmilitary 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
  • The nonmilitary spouse/civil union partner maintains a domicile in another state; and
  • It is the nonmilitary spouse's/civil union partner's intention to leave New Jersey when the military spouse/civil union partner is transferred or leaves the service.

Under the Military Spouses Residency Relief Act, a nonmilitary spouse/civil union partner who meets these requirements is not subject to New Jersey gross income tax on income (wages) earned from services performed in this State. If you are a nonmilitary spouse/civil union partner whose wages are exempt from New Jersey gross income tax, file Form NJ-165, Employee's Certificate of Nonresidence in New Jersey, with your employer to stop future withholding of New Jersey income tax. You must notify your employer if conditions for the withholding exemption no longer apply. If New Jersey income tax was withheld or estimated payments were made in error, you must file a nonresident return (Form NJ-1040NR) to obtain a refund.

The Military Spouses Residency Relief Act applies only to income (wages) from services performed by a nonresident civilian spouse/civil union partner of a servicemember. Nonresident civilian spouses/civil union partners are subject to New Jersey gross income tax on all other types of income earned from New Jersey sources (e.g., income from a business carried on in this State, gain from sale of property located in New Jersey) and must file a New Jersey nonresident return if required. See “Who Must File” on page 8. Wages earned in New Jersey by a nonresident civilian spouse/civil union partner who lives outside the State are also subject to New Jersey gross income tax. A nonresident civilian spouse/ civil union partner who lives outside New Jersey may not use Form NJ-165 to claim an exemption from New Jersey gross income tax withholding on wages earned in this State as the nonmilitary spouse/civil union partner of a servicemember.

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 (and the rules affecting their spouses), 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 2010 New Jersey income tax return is due by April 18, 2011. 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. We will notify you only if your extension request is denied, but not until after your return is actually filed. Penalties and interest are imposed whenever tax is paid after the original due date.

Six-Month Extension

TIP: You may receive a six-month extension of time to file your New Jersey resident income tax return. An application for an extension of time to file is accepted only 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

  1. 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
  2. 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 an 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.

You will find an application for extension (Form NJ-630) at the front of this booklet. Do not use the preprinted Form NJ-630 if you filed a joint return last year and this year you are filing your return using only your own social security number or you are filing a joint return with a different person. See page 63 for how to obtain Form NJ-630. Or, you can file an extension application online until April 18 at http://www.state.nj.us/treasury/taxation/.

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 on page 12, 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 2010 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. Do not use the preprinted payment voucher if you filed a joint return last year and this year you are filing your return using only your own social security number or you are filing a joint return with a different person.

Make check or money order payable to State of New Jersey - TGI. Write your social security number on the check or money order. For a joint return use social security numbers of both husband and wife/civil union partners in the same order the names are listed on the return. Send your payment for the balance due with the payment voucher in the same envelope with your tax return. For information about mailing forms, see “Where to Send Your Return” on page 14.

If you are paying a balance due for the 2010 tax year and are making the first installment of estimated tax for 2011, please use separate checks or money orders for each payment. Send your 2011 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 2010 income tax return.

Electronic Check (e-check). You may be able to pay your 2010 New Jersey income taxes or make a payment of estimated tax for 2011 by e-check. This option is available on the Division's Web site (http://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 2009 return, you may not be able to pay by e-check.
  3. E-check payments made using an account that is funded from a financial institution outside the United States will not be accepted.

Credit Card. You may pay your 2010 New Jersey income taxes or make a payment of estimated tax for 2011 by credit card. Pay by phone (1-800-2PAYTAX, toll-free) or online (http://www.state.nj.us/treasury/taxation/) and use a Visa, American Express, Master- Card, or Discover credit card. You may be asked to enter a jurisdiction code to make your payment. The code for New Jersey personal income tax 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 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:

  1. Remove all labels along perforations from envelope flap; and
  2. Choose the correct label for your return.

    Mail Returns Indicating Tax Due Together With Payment Voucher and Check or Money Order to:

    STATE OF NEW JERSEY
    DIVISION OF TAXATION
    REVENUE PROCESSING CENTER - PAYMENTS
    PO BOX 111
    TRENTON NJ 08645-0111

    Mail Returns Requesting a Refund (or with No Tax Due), or Mail Property Tax Credit Applications Filed Without Income Tax Returns to:

  3. STATE OF NEW JERSEY
    DIVISION OF TAXATION
    REVENUE PROCESSING CENTER - REFUNDS
    PO BOX 555
    TRENTON NJ 08647-0555

  4. Moisten and affix only the correct label on the front of the large return envelope.

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 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 benefits 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 benefit to any of these debts, you will be notified by mail.

Deceased Taxpayers

If a person received income in 2010 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 28 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 27 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 with- holdings 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 2011.

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 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 filing only a property tax credit application (Form NJ-1040-H), 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.

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 provi sions 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: For the 2010 taxable year and later, preparers that reasonably expect to prepare 11 or more individual gross income tax resident returns (including those filed for trusts and estates) during the tax year must use electronic methods for filing such returns. 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 property tax credit application. This list will be used to avoid duplication of names on jury lists. The Division of Taxation is also required to transmit to the Department of Human Services (DHS) annually information from New Jersey resident tax returns that will permit DHS to identify individuals who do not have health insurance and who may be eligible for Medicaid or the NJ FamilyCare Program.

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.

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 one. 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 (or your spouse/civil union partner) 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.

Note: A copy of Form W-7 (or W-7A) cannot be used in place of a valid social security number, ITIN, or ATIN for a dependent when completing Line 13, Dependents' Information.

County/Municipality Code

Enter your four-digit county/municipality 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 http://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 10 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.

Partners in 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. Civil union partners may not use the filing status single. Any reference in this booklet to a spouse also refers to a partner in 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 (http://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 18).

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 statuses at Lines 2 and 3. However, if you also entered into a legally sanctioned same-sex relationship outside New Jersey, you may still be able to use the joint or separate filing statuses for married/CU couples. For more information, see the Division's Web site (http://www.state.nj.us/treasury/taxation/).

For more information, 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 provided 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

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.

You must also fill in the oval for each dependent who does not have health insurance coverage (including NJ FamilyCare/ Medicaid, Medicare, private, or other health insurance) on the date you file the return. Do not fill in the oval for any dependents who have health insurance. This information will be transmitted to the New Jersey Department of Human Services and will be used to identify and reach out to residents who are uninsured to make them aware of the availability of health care coverage under the Medicaid and NJ FamilyCare Programs.

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. If you do not provide a valid social security number, ITIN, or ATIN for a dependent claimed on Lines 9 and/or 10, the exemption will be disallowed.

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 17 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.

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 67 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 Commission
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: http://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.

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 42.

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.

Be sure to take the fig-ure(s) from the “State wages” box on your W-2(s). See sample W-2 on page 22.

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 42 for more information.

Pension and annuity income or early retirement benefits should not be in cluded 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:

  1. The meals and/or lodging were furnished on the business premises of your employer; and
  2. The meals and/or lodging were furnished for the convenience of your employer; and For lodging only:
  3. 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.

Gross Income includes the following:

  • Wages and other compensation
  • Interest and dividends
  • Earnings on nonqualified withdrawals from qualified state tuition program accounts, including the New Jersey Better Educational Savings Trust Program (NJBEST) accounts
  • Net profits from business, trade, or profession
  • Net gains or income from sale or disposition of property
  • Pensions, annuities, and IRA withdrawals
  • Net distributive share of partnership income
  • Net pro rata share of S corporation income
  • Net rental, royalty, and copyright income
  • Net gambling winnings, including New Jersey Lottery winnings from prize amounts exceeding $10,000
  • Alimony
  • Estate and trust income
  • Income in respect of a decedent
  • Prizes and awards, including scholarships and fellowships (unless they satisfy the conditions on page 28)
  • Value of residence provided by employer
  • Fees for services rendered, including jury duty New Jersey gross income also includes the following which are not subject to Federal income tax:
  • Interest from obligations of states and their political subdivisions, other than New Jersey and its political subdivisions
  • Income earned by a resident from foreign employment
  • Certain contributions to pensions and tax-deferred annuities
  • Employee contributions to Federal Thrift Savings Funds, 403(b), 457, SEP, or any other type of retirement plan other than 401(k) Plans

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:

  1. The expenses for which you are reimbursed are job-related expenses;
  2. You are required to and do account for these expenses to your employer; and
  3. 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 $2,760 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 should 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 independent contractor 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.

  1. The cost of moving your household goods and personal effects from the old home to the new home.
  2. 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:

  1. The payments must be compensation for wage loss which results from absence due to injury or sickness of the employee; and
  2. The payments must be due and payable under an enforceable contractual obligation under the plan; and
  3. 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.

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.

  • Federal Social Security
  • Railroad Retirement (Tier 1 and Tier 2)
  • United States military pensions and survivor's benefit payments
  • Life insurance proceeds received because of a person's death
  • Employee's death benefits
  • Permanent and total disability, including VA benefits
  • Temporary disability received from the State of New Jersey or as third-party sick pay
  • Workers' Compensation
  • Gifts and inheritances
  • Qualifying scholarships or fellowship grants
  • New Jersey Lottery winnings from prizes in the amount of $10,000 or less
  • Unemployment Compensation
  • Family Leave Insurance (FLI) benefits
  • Interest and capital gains from: (a) Obligations of the State of New Jersey or any of its political subdivisions; or (b) Direct Federal obligations exempt under law, such as U.S. Savings Bonds and Treasury Bills, Notes, and Bonds (see Line 15b)
  • Distributions paid by mutual funds to the extent the distributions are attributable to interest earned on Federal obligations
  • Certain distributions from “New Jersey Qualified Investment Funds” (see Line 15b)
  • Earnings on qualified withdrawals from qualified state tuition program accounts, including the New Jersey Better Educational Savings Trust Program (NJBEST) accounts
  • Employer and employee contributions to 401(k) Salary Reduction Plans (but not Federal Thrift Savings Funds)
  • Some benefits received from certain employer-provided cafeteria plans (but not salary reduction or premium conversion plans). Request Division Technical Bulletin TB-39
  • Contributions to and distributions from Archer MSAs if they are excluded for Federal income tax purposes
  • Direct payments and benefits received under homeless persons assistance programs
  • Homestead rebates, FAIR rebates, and NJ SAVER rebates
  • Property tax reimbursements (benefits received under Senior Freeze Program)
  • Income tax refunds (New Jersey, Federal, and other jurisdictions)
  • New Jersey earned income tax credit payments
  • Welfare
  • Child support
  • Amounts paid as reparations or restitution to Nazi Holocaust victims
  • Assistance from a charitable organization, whether in the form of cash or property

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 28. 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 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

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 complete and retain Form IF-1, Certification of Qualified Investment Fund, to document its status. This certification need not be filed with the Division of Taxation but must be made available upon request.

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 tax- exempt 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 28.

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 tax- free 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):

  1. Add any amount you deducted for taxes based on income.
  2. 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.
  3. 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.
  4. Deduct the remaining 50% of meal and entertainment expenses (that were disallowed on the Federal return).
  5. 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.
  6. Add interest and dividends derived in the conduct of a trade or business.
  7. Add or subtract income or losses derived in the conduct of a trade or business from rentals, royalties, patents, or copyrights.
  8. Add or subtract gains or losses from the sale, exchange, or other disposition of the trade or business's property.
  9. 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.
  10. 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 (http://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 (http://www.state.nj.us/treasury/taxation/).

Anyone engaged in a business, trade, profession, or occupation in New Jersey must register with the State for tax purposes by filing a Business Registration Application, Form NJ-REG. Form NJ-REG may be filed online at: www.state.nj.us/njbgs/.

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 46.

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 26 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 28 and Line 27b on page 30.

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 18.)

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 below before continuing.
  • The taxable amount of an IRA withdrawal must be determined by completing Worksheet C, IRA Withdrawals, on page 26. Do not use Worksheet A or B for an IRA withdrawal.

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 Roll- overs. When a lump-sum distribution of the entire balance from a qualified em-ployee 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.

  1. 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.
  2. 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.

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.

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 contribution was made to your IRA, and which is:

  1. Made on or after the date on which an individual reaches age 59½; or
  2. Made to a beneficiary (or the individual's estate) after the individual's death; or
  3. Made because the individual becomes disabled; or
  4. 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.

Conversions. If you converted an existing IRA to a rollover Roth IRA during tax year 2010, any amount from the existing IRA that would be taxable if withdrawn must be included in your gross income. If you made a Federal election to report the income in equal installments in 2011 and 2012, you must also report the amount that is taxable for New Jersey purposes in equal installments in 2011 and 2012. However, if you elect to report the entire amount of income from the conversion on your Federal return for 2010, you must report the entire amount that is taxable for New Jersey purposes on Line 19 of your 2010 New Jersey return.

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 each Schedule NJ-K-1, Form CBT-100S, which you received from the S corporation(s). 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 48.

Line 23 - Net Gambling Winnings

New Jersey Lottery win nings from prize amounts exceeding $10,000 are taxable for New Jersey gross income tax purposes. The individual prize amount, not the total amount of New Jersey Lottery winnings over the year, determines taxability.

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 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, losing lottery 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 from prizes in the amount of $10,000 or less 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.

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 GITDEP 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 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 (http://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:

  1. The primary purpose of the grant is to further the recipient's education or training; and
  2. 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
  3. 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.

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.

Maximum Pension Exclusion
Amount: For Filing Status:
$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

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 30 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 on page 28. The amount on Line 27a should never be more than the amount on Line 19. Part- year 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 on page 29 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.

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 In come on Line 28 is $20,000 or less ($10,000 if filing status is single or mar- ried/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 38.

Note: 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.

Homeowners and tenants age 65 or older or disabled who are not required to file a New Jersey income tax return (because of income below the filing threshold) and who meet the qualifications for a property tax credit may file only Form NJ-1040-H to claim the credit. See the instructions on page 49.

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 on page 30 and enter the total on Line 29, Form NJ-1040.

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 below 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 insur ance 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 you withdraw before the due date of your tax return are not taxable. However, you must report the earnings associated with the excess contributions you withdraw as wages on Line 14.

Self-Employed Health Insurance Deduction. If you are considered a self- employed individual for Federal income tax purposes, or you received wages in 2010 from an S corporation in which you were a more-than-2% shareholder, you may deduct the amount you paid during the year for health insurance for yourself, your spouse/civil union partner or domestic partner, and your dependents. The amount of the deduction may not exceed the amount of your earned income, as defined for Federal income tax purposes, derived from the business under which the insurance plan is established. You may not deduct any amounts paid for health insurance coverage for any month during the year in which you were eligible to participate in any subsidized health plan maintained by your (or your spouse's/civil union partner's or domestic partner's) employer.

Line 31 - Alimony and Separate Maintenance Payments

Enter on Line 31 the amount of alimony and separate maintenance paid which was required under a decree of divorce/dissolution or separate maintenance. Do not include payments for child support.

Line 32 - Qualified Conservation Contributions

Enter on Line 32 the amount of any contribution you made for conservation purposes of a qualified real property interest in property located in New Jersey. The amount of the deduction is the amount of the contribution allowed as a deduction in computing your taxable income for Federal income tax purposes. If you are required to file Federal Form 8283 with your Federal Form 1040, enclose a copy.

Line 33 - Health Enterprise Zone Deduction

Eligible taxpayers 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) enter the amount of their HEZ deduction on Line 33. Partners and S corporation shareholders of a qualified practice enter the HEZ deduction amount listed on Schedule NJK-1, Form NJ-1065, or Schedule NJ-K-1, Form CBT-100S. Sole proprietors must calculate the amount of their HEZ deduction for 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 (http://www.state.nj.us/treasury/taxation/).

Line 34 - Total Exemptions and Deductions

Enter on Line 34 the total of Lines 29, 30, 31, 32, and 33.

Line 35 - Taxable Income

Subtract Line 34 from Line 28 and enter the result on Line 35. If Line 35 is zero or less, make no entry.

Line 36a - Total Property Taxes Paid

Enter on Line 36a the property taxes due and paid during 2010 on your qualified principal residence in New Jersey. For tenants, 18% of the rent paid during the year is considered property taxes paid. Read the instructions below to make sure you enter the correct amount based on your circumstances.

Complete Worksheet F-1 before entering an amount on Line 36a if you had more than one New Jersey residence during 2010, your principal residence had multiple owners (or multiple tenants), or consisted of multiple units.

Claiming the Property Tax Deduction/Credit. Homeowners and tenants who pay property taxes, either directly or through rent, on their principal residence in New Jersey may qualify for either a deduction or a refundable credit. You will use the amount from Line 36a to determine whether you will receive a greater tax benefit by claiming a property tax deduction on Line 36c or a property tax credit on Line 48. See the instructions for determining the amount of your property tax deduction/credit on page 35. You will not receive either a deduction or credit unless you complete Line 36c or Line 48.

Principal Residence A principal residence means a homestead, either owned or rented, actually and continually occupied as your permanent residence. Do not include property taxes paid for a vacation home, a “second home,” or property which the owner rents to someone else.

Homeowners Enter on Line 36a the property taxes paid for the home in New Jersey that you owned and lived in as your principal residence. Both single-family homes and certain multi-unit properties may qualify. See below.

Multiple Owners. If you own your principal residence with someone else (other than your spouse/civil union partner) enter the amount of property taxes paid that reflects your percentage of ownership in the property. Complete Worksheet F-1 to calculate the amount.

Multi-Unit Properties. If you own a multi-unit property and occupy a portion of the property as your principal residence, enter the property taxes paid for the percentage of the property you occupy. Complete Worksheet F-1 to calculate the amount. Enter an amount on Line 36a only if the property contains four units or less, and of these four units, only one may be used for commercial purposes.

Condominiums and Co-ops. A condominium unit or a unit in a cooperative housing complex or mutual housing corporation is considered a single-family dwelling.

Continuing Care Communities. As a resident in a continuing care retirement community, you are considered a homeowner if the continuing care contract requires you to pay the proportionate share of property taxes attributable to your unit.

Disabled Veterans. Totally and permanently disabled veterans who have a 100% exemption from local property taxes do not enter an amount on Line 36a. If any portion of the dwelling is rented to a tenant and property taxes are paid by the disabled veteran owner on the rented portion, such taxes may not be entered on Line 36a of the property owner's return. However, eligible tenants may enter 18% of the rent paid on their own income tax returns.

P.I.L.O.T. Payments. Do not enter on Line 36a P.I.L.O.T. (Payments-in-Lieuof- Tax) payments you made to your municipality as a homeowner. These payments are not property taxes.

Life Tenancy. You are considered to be a homeowner if you have life tenancy rights or hold a lease for 99 years or more.

Tenants Enter on Line 36a the amount of property taxes paid for a home or apartment you rented in New Jersey and lived in as your principal residence, provided that the building is subject to local property taxes and your dwelling unit contains its own separate kitchen and bathroom that are not shared with others in the building. For tenants, 18% of the rent paid during the year is considered property taxes paid.

Mobile Homes. If you own a mobile home which is located in a mobile home park, you are considered a tenant. For more information on mobile homes, contact the New Jersey Division of Taxation Customer Service Center.

Tax-Exempt, Subsidized, and Campus Housing. Tenants living in dwellings which are not subject to local property taxes do not enter 18% of the rent paid on Line 36a. This includes: tenants living in tax-exempt housing or other dwellings owned by the State, County, Municipal, or Federal government; students living in on-campus apartments at State colleges and universities; tenants living in dwellings owned by religious, charitable, or other nonprofit organizations (including on-campus apartments at private nonprofit colleges and universities), if the property is exempt from local property taxes; and tenants who lived in a dwelling on which P.I.L.O.T. (Payments-in-Lieu-of-Tax) payments were made to the municipality.

Do not enter a figure on Lines 36a - 36c or Line 48 of the tax return if the dwelling you rent is not subject to local property taxes. If you are not sure whether the dwelling you rent is subject to local property taxes, contact your building manager or the municipal tax assessor for information. The Division of Taxation audits returns to ensure compliance with these requirements.

Calculating the Amount to Enter on Line 36a Review the information below for determining the amount of property taxes to enter on Line 36a if:

  • You had more than one New Jersey residence during 2010; or
  • Your principal residence had multiple owners or multiple tenants, or consisted of multiple units; or
  • You and your spouse/civil union partner file separate returns but maintain the same principal residence; or
  • You were a part-year resident.

Spouses/Civil Union Partners Filing Separate Returns, but Maintaining Same Principal Residence. If you and your spouse/civil union partner file separate returns but maintain the same principal residence, enter on Line 36a one-half of the property taxes (or one-half of 18% of rent) due and paid.

Multiple Residences, Owners, Units, or Tenants. Complete Worksheet F-1 on page 34 before completing Line 36a if:

  • You lived in more than one qualifying New Jersey residence during 2010; or
  • You shared ownership of a principal residence during the year with anyone other than your spouse/civil union partner; or
  • A principal residence you owned during the year consisted of multiple units; or
  • Anyone other than your spouse/civil union partner occupied and shared rent with you for an apartment or other rental dwelling unit; or
  • You were both a homeowner and a tenant during the year.

If you were a homeowner, enter the amount from line 4, Worksheet F-1 on Line 36a. If you were a tenant, enter the amount from line 9, Worksheet F-1 on Line 36a. If you were both a homeowner and a tenant during the year, add the amount from line 4, Worksheet F-1 and the amount from line 9, Worksheet F-1 and enter the total on Line 36a.

If you lived for part of the year in a residence that did not meet the requirements on page 32, do not enter on Line 36a any property taxes paid for the period of time you lived in that residence. However, if you moved during the year and lived for part of the year in a residence that qualifies, complete Worksheet F-1 for the qualified residence only. Do not list any information pertaining to the nonqualified residence.

Part-year residents. If you were a part- year New Jersey resident, and you were either a qualified homeowner or tenant, or both a homeowner and a tenant during the part of the year you lived in this State, enter on Line 36a the total amount of property taxes (or 18% of rent) due and paid during your period of residence (see page 9).

Note: Part-year residents must complete Worksheet F-1 only if one or more of the conditions listed under Multiple Residences, Owners, Units, or Tenants above apply.

Homeowner on October 1, 2010 (Line 36b)

If you owned and occupied a home in New Jersey that was your principal residence on October 1, 2010, and property taxes were paid on that dwelling, fill in the oval on this line. Do not fill in the oval if you were a tenant on October 1, 2010, or if you were not a homeowner on October 1, 2010.

Eligibility for the Property Tax Deduction/Credit (Lines 36c and 48)

Homeowners and tenants who pay property taxes, either directly or through rent, on their principal residence in New Jersey may qualify for either a deduction or a refundable credit.

The property tax deduction reduces your taxable income. Therefore, the tax benefit varies depending on the amount of your taxable income, the amount of your property taxes or rent, and your filing status. The property tax credit reduces your tax due. The credit increases the total payments and/or credits on Line 54, Form NJ-1040. These payments and/or credits are subtracted directly from your tax liability. To determine the actual tax benefit you will receive (how much you will reduce your tax liability) when claiming a property tax deduction, you must calculate your tax liability both with a deduction and without a deduction. Taxpayers who do not reduce their tax liability by $50 or more ($25 if spouses/civil union partners file separate returns but maintain the same principal residence) when claiming the property tax deduction should claim the property tax credit instead.

Eligibility Requirements. To be eligible for a property tax deduction or property tax credit:

  • . You must have been domiciled and maintained a principal residence as a homeowner or tenant in New Jersey during 2010; and
  • . Your principal residence, whether owned or rented, must be subject to local property taxes, and property taxes must have been paid on that residence either as actual property taxes or through rent; and
  • . Your rented dwelling must have its own separate kitchen and bath facilities; and
  • . Your gross income on Line 28 is more than $20,000 ($10,000 if filing status is single or married/CU partner, filing separate return), or you (and/or your spouse/civil union partner if filing jointly) were 65 years of age or older or blind or disabled on the last day of the tax year.

Taxpayers who were not 65 years of age or older or blind or disabled on December 31, 2010, with gross income of $20,000 or less ($10,000 if filing status is single or married/CU partner, filing separate return), are not eligible for a property tax credit.

If you are not eligible for a property tax deduction or credit, make no entry on Lines 36c or Line 48 and continue completing the return with Line 37.

Seniors or Blind/Disabled Persons With Income Below Filing Threshold

If you (or your spouse/civil union partner if filing jointly) were 65 years of age or older or blind or disabled on the last day of the tax 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), and you satisfy the eligibility requirements, you qualify for a property tax credit in the amount of $50 ($25 if you and your spouse/civil union partner file separate returns but maintain the same principal residence).

If you are eligible for a property tax credit as either a homeowner or tenant, and you:

  • Are eligible and file for a 2010 homestead benefit because you were a New Jersey homeowner on October 1, 2010, your credit will automatically be included with your homestead benefit. If you are filing Form NJ‑1040, do not complete Line 36c to claim a property tax deduction or Line 48 to claim a property tax credit. Information on eligibility and how to apply for a homestead benefit can be found on the Division's Web site http://www.state.nj.us/treasury/taxation/).
  • Are not eligible for a 2010 homestead benefit because you were not a homeowner on October 1, 2010, you may claim the property tax credit on Form NJ-1040 or you can file the property tax credit application, Form NJ-1040-H only. See page 49. Do not file both Form NJ-1040 and Form NJ-1040-H.

Line 36c - Property Tax Deduction

If you satisfied the eligibility requirements above, you may be able to deduct up to 100% of property taxes due and paid or up to $10,000, whichever is less. For tenants, 18% of the rent paid during the year is considered property taxes paid. If you were an eligible homeowner or a tenant during some part of 2010, you qualify for a property tax deduction or credit even if you were not a homeowner or a tenant on October 1, 2010.

If you are eligible for a property tax deduction or credit, and you:

  • Are not claiming credit for taxes paid to other jurisdictions, complete Worksheet F on page 36 to determine the amount of your property tax deduction and whether you should elect to take the property tax credit on Line 48 instead of the deduction on Line 36c.
  • Are claiming credit for taxes paid to other jurisdictions, first complete lines 1 and 2 of Worksheet F. Then complete Schedule A and Worksheet H to determine whether you will receive a greater tax benefit by taking the property tax deduction or the property tax credit. See the instructions for Schedule A on page 42.

If you will receive a greater tax benefit by taking the property tax deduction, enter on Line 36c the amount of the property tax deduction from Worksheet F or Schedule A, as appropriate and make no entry on Line 48.

Line 37 - New Jersey Taxable Income

Subtract Line 36c from Line 35. If zero or less, make no entry.

Line 38 - Tax on Amount on Line 37

Compute your tax by using one of the following methods.

Tax Table. If your New Jersey taxable income is less than $100,000, you may use the New Jersey Tax Table on page 53 or the New Jersey Tax Rate Schedules on page 62 to find your tax. When using the tax table, be sure to use the correct column. After you have found your tax, enter the amount on Line 38.

Tax Rate Schedules. You must use the New Jersey Tax Rate Schedules on page 62 if your New Jersey taxable income is $100,000 or more. Use the correct schedule for your filing status. After you have calculated your tax, enter the amount on Line 38.

Line 39 - Tax

Enter on Line 39 the amount of tax from Line 38, page 2.

Line 40 - Credit for Income Taxes Paid to Other Jurisdictions

Enter on Line 40 the amount of credit allowed as calculated on Schedule A. If you are claiming credit for income or wage taxes paid to more than one jurisdiction, complete a Schedule A for each (see instructions on page 42) and enter on Line 40 the total amount of the credits allowed from each Schedule A. If you are claiming a property tax deduction or credit, you must also complete Worksheet H to determine the amount of your benefit. If you are not eligible for a property tax benefit, enter on Line 40 the amount from Line 9, Column B, Schedule A(s).

The credit on Line 40 may not exceed your tax on Line 38. Enclose Schedule A(s) with your return. See the instructions for Schedule A on page 42.

Jurisdiction Codes (Line 40) Code Multiple Jurisdictions 00 Alabama 01 Arizona 03 Arkansas 04 California 05 Colorado 06 Connecticut 07 Delaware 08 Georgia 10 Hawaii 11 Idaho 12 Illinois 13 Indiana 14 Iowa 15 Kansas 16 Kentucky 17 Louisiana 18 Maine 19 Maryland 20 Massachusetts 21 Michigan 22 Minnesota 23 Mississippi 24 Code Missouri 25 Montana 26 Nebraska 27 New Hampshire 29 New Mexico 31 New York 32 North Carolina 33 North Dakota 34 Ohio 35 Oklahoma 36 Oregon 37 Pennsylvania 38 Rhode Island 39 South Carolina 40 Tennessee 42 Utah 44 Vermont 45 Virginia 46 West Virginia 48 Wisconsin 49 Dist. of Columbia 51 Philadelphia 52 Other 53

Enter in the boxes at Line 40 the code for the jurisdiction for which you are claiming a credit. (See chart above.) If you are claiming credit for taxes paid to more than one jurisdiction (e.g., New York State and New York City or Delaware and Maryland), use the code for “Multiple Jurisdictions.” If the jurisdiction to which you paid taxes is not listed, use the code for “Other.”

Line 41 - Balance of Tax

Subtract Line 40 from Line 39 and enter the result on Line 41.

Line 42 - Sheltered Workshop Tax Credit

Enter on Line 42 your Sheltered Workshop Tax Credit for the current year from Part IV, line 12 of Form GIT-317. See page 63 for how to request Form GIT-317 and instructions. Enclose a copy of Form GIT-317 with your return and retain a completed copy for your records.

Line 43 - Balance of Tax After Credit

Subtract Line 42 from Line 41 and enter the result on Line 43.

Line 44 - Use Tax Due on Out-of-State Purchases

If you were a New Jersey resident and you purchased items or services that were subject to New Jersey sales tax, you are liable for use tax at the rate of 7% of the purchase price if sales tax has not been paid. If sales tax has been collected out of State, use tax is only due if the tax was paid at a rate less than 7%, based on the difference.

For example:

  • . You purchased a computer for $1,500 from a seller located outside of New Jersey and no sales tax was collected. Your use tax liability to New Jersey on this item is $105 ($1,500 . .07 = $105).
  • . On a trip to Maine you purchased an antique desk for $4,000 and paid Maine sales tax at the rate of 5%. The difference, $80 (2% of the purchase price), is due to New Jersey as use tax.

Individual taxpayers report and remit use tax by either completing and filing the Use Tax Return (Form ST-18) within 20 days after property is brought into New Jersey or by reporting any use tax due on Line 44 of their resident income tax return, Form NJ-1040.

Form ST-18 is provided in this booklet for your convenience (in the center of the booklet with other tax forms). You may photocopy Form ST-18 and use it to remit use tax throughout the year.

If you owe use tax and are remitting it with Form NJ-1040, compute the amount of use tax due as follows:

Step 1 Items or services costing less than $1,000 each. If you know the amount of your purchases in this category, calculate the exact amount of use tax due by multiplying the amount of your purchases by 7% (.07). OR, if you have incomplete or inaccurate receipts for your purchases, you may use the Estimated Use Tax Chart to estimate the amount of use tax due.

Note: Using the Estimated Use Tax Chart to determine the amount of use tax you report on Line 44 does not preclude the Division of Taxation from auditing your account. New Jersey does have access to records maintained by out-of-State businesses, and if additional tax is due, you may receive an assessment for the amount of use tax owed, plus applicable penalties and interest.

Step 2 Items or services costing $1,000 or more each. You must calculate the exact amount of use tax due on all purchases in this category.

Step 3 Total use tax due. Add the amounts determined in Steps 1 and 2. Enter the result on Line 44, Form NJ-1040.

If you do not owe use tax, you must enter “0.00” on Line 44.

Line 45 - Penalty for Underpayment of Estimated Tax

To determine the amount of interest for the underpayment of estimated tax, complete Form NJ-2210, Underpayment of Estimated Tax by Individuals, Estates or Trusts. 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. See “Estimated Tax” on page 15.

Line 46 - Total Tax and Penalty

Enter on Line 46 the total of Lines 43, 44, and 45.

Line 47 - Total New Jersey Income Tax Withheld

Enter on Line 47 the total New Jersey income tax withheld, as shown on your W-2, W-2G, and/or 1099 statement(s). All W-2 and 1099 statements must reflect your correct social security number for the withholdings to be credited. If the social security number is missing or incorrect, you must obtain a corrected statement. Only your employer/payer can issue or correct these forms. If you have not received a W-2 or 1099 form by February 15, or if the form you received is incorrect, contact your employer/payer immediately.

Form W-2. The W-2 must indicate the amount of New Jersey tax withheld and the “State” box must indicate that the tax withheld was New Jersey income tax. See sample W-2 on page 22. Enclose the state copy of each withholding statement (W-2, W-2G).

Do not include on Line 47 amounts withheld as New Jersey unemployment insurance/workforce development partnership fund/supplemental workforce fund contributions (shown on the W-2 as UI/WF/SWF, if combined, or UI, WF, and SWF if stated separately), New Jersey disability insurance contributions (may be shown as DI), or New Jersey family leave insurance contributions (shown as FLI). These are not New Jersey income tax withholdings and may not be used as credits on Line 47.

See instructions for Lines 51, 52, and 53 for more information on excess unemployment insurance/workforce development partnership fund/supplemental workforce fund contributions, disability insurance contributions, and/or family leave insurance contributions.

Form 1099. Although most 1099 forms do not show state withholding, New Jersey income tax may have been withheld from income you received that was reported on Form 1099-R or 1099-MISC. Enter on Line 47 the total amount of New Jersey income tax withheld, if any, shown on those statements. Enclose the state copy of Form 1099-R or 1099-MISC with your return only if New Jersey in come tax was withheld.

Line 48 - Property Tax Credit

If you satisfied the eligibility requirements (see page 35) and you did not claim a property tax deduction on Line 36c, you qualify for a property tax credit.

Do not complete Line 48 if:

  • . You claimed a property tax deduction on Line 36c; or
  • . Your gross income on Line 28, Form NJ-1040 is $20,000 or less ($10,000 if filing status is single or married/CU partner, filing separate return).

Note: If you are 65 years of age or older or blind or disabled, and you are not required to file Form NJ-1040 because your gross income on Line 28 is $20,000 or less ($10,000 if filing status is single or mar- ried/CU partner, filing separate return), and you satisfy the eligibility requirements, you qualify for a property tax credit in the amount of $50 ($25 if you and your spouse/ civil union partner file separate returns but maintain the same principal residence). See “Seniors or Blind/Disabled Persons” on page 35 before completing Line 48.

Line 49 - New Jersey Estimated Payments/Credit From 2009 Tax Return

Enter on Line 49 the total of:

  • Estimated tax payments made for 2010 (See “Estimated Tax” on page 15)
  • Credit applied from your 2009 tax return*
  • Amount, if any, paid to qualify for an extension of time to file

*This is the amount of overpayment that you chose to carry forward on Line 56 of your 2009 NJ-1040 as a credit towards your income tax liability for 2010. If you received a refund check for 2009, do not enter the amount of that refund check on Line 49. Earned Income Tax Credit

Payments Made Under Another Name or Social Security Number. If you changed your name because of marriage/ civil union, divorce/dissolution, etc., and you made estimated tax payments using your former name, enclose a statement with your return explaining all the payments you and/or your spouse/civil union partner made for 2010 and the name(s) and social security number(s) under which you made payments.

If your spouse/civil union partner died during the year and any estimated payment(s) were made under the deceased spouse's/civil union partner's social security number and other payments were made under your social security number, you must enclose a statement with your return listing the social security numbers and the amounts submitted under each social security number.

Line 50 - New Jersey Earned Income Tax Credit

The New Jersey earned income tax credit is a credit for certain taxpayers who work and have earned income. The credit reduces the amount of tax you owe and may also give you a refund, even if you have no tax liability to New Jersey.

Note: You must file a New Jersey resident income tax return to receive a New Jersey earned income tax credit, even if you are not required to file a return because your gross income is below the minimum income filing threshold.

For tax year 2010, residents who are eligible and file for a Federal earned income credit can also receive a New Jersey earned income tax credit in the amount equal to 20% of the Federal benefit.

Use Worksheet G above to calculate the amount of your New Jersey earned income tax credit for Line 50. If you asked the Internal Revenue Service to calculate your Federal earned income credit, fill in the first oval below Line 50. (Civil union couples should not fill in this oval even if one or both of you are eligible for a Federal credit and asked the IRS to calculate the amount. See the instructions below.) The IRS will provide information regarding Federal earned income credit recipients to the Division of Taxation in October 2011. Please allow at least 4-6 weeks for the Division to process the information and issue a check for your New Jersey earned income tax credit.

Part-Year Residents. If you were a New Jersey resident for only part of the taxable year, the amount of your New Jersey earned income tax 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. Use this prorated figure on Line 50.

Civil Union Couples. If you are filing a joint return for New Jersey purposes, and either one or both of you are eligible and file for a Federal earned income credit, you might also be able to receive a New Jersey earned income tax credit. A civil union partner filing a separate return is not eligible for a New Jersey earned income tax credit.

The only way to determine if you are eligible for a New Jersey credit is to prepare a Federal return as if you were married, filing jointly and calculate the amount of the Federal earned income credit, if any, you would have been eligible to receive on a joint Federal return. Once you have determined the amount of the Federal credit you would have received as joint filers, you must use that amount on Worksheet G to calculate your New Jersey credit. Be sure to fill in only the second oval below Line 50 indicating you are a civil union couple. You may be asked to provide documentation to substantiate your calculation of the Federal earned income credit you would have been eligible to receive if you had filed a joint Federal return.

UI/WF/SWF; DI; FLI Credits (Lines 51-53)

You may take credit for excess unemployment insurance/workforce development partnership fund/supplemental workforce fund contributions, disability insurance contributions, and/or family leave insurance contributions withheld by two or more employers. For 2010, the maximum employee unemployment insurance/ workforce development partnership fund/ supplemental workforce fund contribution was $126.22, the maximum employee disability insurance contribution was $148.50, and the maximum employee family leave insurance contribution was $35.64. If you had two or more employers and you contributed more than the maximum amount(s), you must enclose a completed Form NJ-2450 with your return to claim the credit.

If any single employer withheld more than the maximum for either UI/WF/SWF ($126.22), disability insurance ($148.50), or family leave insurance ($35.64) contributions, enter only the maximum amount for that category on Form NJ-2450. You must contact the employer who withheld contributions in excess of the legal maximum for a refund.

All information on Form NJ-2450 must be substantiated by W-2 statements or the claim will be denied. The amounts of unemployment insurance/workforce development partnership fund/supplemental workforce fund contributions, disability insurance contributions, and family leave insurance contributions withheld must be reported separately on all W-2 statements. The employer's New Jersey taxpayer identification number or approved private plan number must also be shown. See sample W-2 on page 22.

Be careful when completing Form NJ-2450 and check that your W-2 verifies the information you provide. If all New Jersey Department of Labor and Workforce Development requirements are not met, your income tax credit must be denied. You must then refile your claim with the Department of Labor and Workforce Development using their Form UC-9A, “Employee's Claim for Refund of Excess Contributions.” Once your income tax credit for excess unemployment insurance/workforce development partnership fund/supplemental workforce fund contributions, disability leave insurance contributions, and/or family leave insurance contributions has been denied, it can only be claimed through the Department of Labor and Workforce Development.

Line 51 - Excess New Jersey UI/WF/SWF Withheld

Enter on Line 51 the excess unemployment insurance/workforce development partnership fund/supplemental workforce fund contributions withheld from Line 4 of Form NJ-2450. Enclose Form NJ-2450 with your return.

Line 52 - Excess New Jersey

Disability Insurance Withheld

Enter on Line 52 the excess disability insurance contributions withheld from Line 5 of Form NJ-2450. Enclose Form NJ-2450 with your return.

Line 53 - Excess New Jersey Family Leave Insurance Withheld

Enter on Line 53 the excess family leave insurance contributions withheld from Line 6 of Form NJ-2450. Enclose Form NJ-2450 with your return.

Line 54 - Total Payments and Credits

Add Lines 47 through 53 and enter the result on Line 54.

Amount You Owe or Overpayment (Lines 55 and 56)

Compare Lines 54 and 46.

  • . If Line 54 is less than Line 46, you have a balance due. Complete Line 55.
  • . If Line 54 is more than Line 46, you have an overpayment. Complete Line 56.

Line 55 - Amount You Owe

Subtract Line 54 (Total Payments/Credits) from Line 46 (Total Tax and Penalty) and enter the result on Line 55.

If you have a balance due, you may make a donation on Lines 58, 59, 60, 61, 62, and/or 63 by adding the amount of your donation to your payment.

Make your check or money order for the total amount payable to “State of New Jersey - TGI.”

You may pay your 2010 New Jersey income taxes by electronic check (e-check) or credit card (Visa, American Express, MasterCard, or Discover). See “How to Pay” on page 13. Fill in the oval below Line 55 if you are paying by e-check or credit card. Do not send in the payment voucher if you pay your taxes by e-check or credit card.

Note: If the amount of tax you owe (Line 55) is more than $400, you may want to increase your estimated payments or contact your employer for Form NJ-W4 to increase your withholdings to avoid future interest assessments.

Line 56 - Amount of Overpayment

Subtract Line 46 (Total Tax and Penalty) from Line 54 (Total Payments/Credits) and enter the result on Line 56.

Line 57 - Credit to Your 2011 Tax

Enter on Line 57 the amount of your overpayment that you wish to credit to your 2011 tax liability.

Contributions (Lines 58-63)

Whether you have an overpayment or a balance due, you may make a donation to any of the following funds:

  • Endangered Wildlife Fund
  • Children's Trust Fund
  • Vietnam Veterans' Memorial Fund
  • Breast Cancer Research Fund, or
  • U.S.S. New Jersey Educational Museum Fund.

You may also make a donation to one of the following funds on Line 63:

  • Drug Abuse Education Fund (01); or
  • Korean Veterans' Memorial Fund (02); or
  • Organ and Tissue Donor Awareness Education Fund (03); or
  • NJ-AIDS Services Fund (04); or
  • Literacy Volunteers of America - New Jersey Fund (05); or
  • New Jersey Prostate Cancer ResearchFund (06); or
  • World Trade Center Scholarship Fund (07); or
  • New Jersey Veterans Haven Support Fund (08); or
  • Community Food Pantry Fund (09); or
  • Cat and Dog Spay/ Neuter Fund (10).

For more information on the funds, see page 5.

Indicate the amount you want to contribute by checking the appropriate box(es) or entering any amount you wish to contribute.

If you are making a donation on Line 63, also enter the code number (01, 02, 03, 04, 05, 06, 07, 08, 09, or 10) for the fund of your choice.

The amount you donate will reduce your refund or increase your balance due. Be sure to enter an amount when making a contribution.

If you are making a donation on Line 58, 59, 60, 61, 62, and/or 63, and you have a balance due, increase the amount of your payment by the amount you wish to contribute. If you are paying your tax due by check and including a donation, your check or money order must be made out to “State of New Jersey - TGI,” not to the charity or charities you selected. Your donation will be deposited in the appropriate fund(s) when your return is processed.

Remember-

  • If you are completing Schedules A, B, or C, see the following pages.
  • If you are not required to file a New Jersey Resident Income Tax Return (Form NJ-1040) and you do not qualify for a New Jersey earned income tax credit, but you qualify for a property tax credit, you may be able to file only the property tax credit application, Form NJ-1040-H. See page 49.
  • Do not staple, paper clip, or tape any documents to the tax return. Also do not staple or tape the return pages together.

Line 64 - Total Deductions From Overpayment

Add any amounts on Lines 57, 58, 59, 60, 61, 62, and/or 63. Enter the result on Line 64.

Line 65 - Refund

Subtract Line 64 from Line 56 (Overpayment). Enter the result on Line 65. This is the amount of your refund.