2011
Volunteer
Tax Preparation
NJ Division of Taxation
www.njtaxation.org
Important Contact Information
• Regional Information Centers
• Customer Service Center
– 609/292-6400
• Division of Revenue E-File Unit
– 609/633-1132
• Training & Outreach
– Outreach.tax@treas.state.nj.us
www.njtaxation.org
New for 2011
• Emancipation Day!!!
– Returns due April 17th, 2012
• Charitable Contributions
– One new charity
• New Jersey Lung Cancer Research Fund
Reminders
• Roth IRA Conversions done in 2010
– 2011/2012 Tax Reporting
• Form NJ-1040-H
– Property Tax Credit
• No Tenant Rebate Application
– Suspended by the State Budget
• Form 1099-G no longer mailed
Important Processing
Information
• Do not staple, clip or otherwise attach
pages together
• Place only 1 return for each envelope
• You may not report a loss on Form
NJ-1040
• Leave unused lines ‘Blank’
Form NJ-1040
Identifying Information
Page 1
Civil Union / Domestic Partner
• Civil Union Couples – Filing Status
– “Married” under NJ Law
– IRS does not recognize CU’s
• Domestic Partner – Exemption
– Not Married
– Line 6 Exemption may apply
• If partner does not file NJ-1040
Line 11: Dependents Attending
College
• Must be a dependent
– Line 9 or 10
• Full-time College Student
– Defined by Institution
• Under age 22
– For Entire Tax Year
Form NJ-1040
Reportable Income
Page 2
Tax-Exempt Income
• Social Security
• Unemployment Compensation
• Debt Cancellation – Form 1099-C
• Military Pensions
Refer to page 21
Wages (Line 14)
• Use W-2 Box 16, ‘State Wages’
• State wages often differ from Federal
wages (Box 1)
• All W-2s received must be included with
the NJ-1040
W-2 Sample
Tax-Exempt Interest (Line 15b)
• Obligations of the State of New Jersey
and/or any of its political subdivisions
• Direct Federal Obligations
• Pub GIT-5, Exempt Obligations
Refer to page 23
Must enclose an itemized schedule if line 15b is over $10,000
Net Profits from Business (Line 17)
• Federal Schedule C
– Use Federal Expenses and Deduction
– 100% Meal/Entertainment Deduction
– Line 17 ‘Blank’ if Net Loss
– See page 23, NJ Instruction Booklet
Reporting Pension,
Annuity, and IRA Income
Line 19
Retirement Plans
Contributory
Non-Contributory
fully taxable
Three-Year Rule / General Rule
• NJ accounting methods
– No ‘Simplified’ Method
• Client needs Contribution Records
• Often varies from Federal Treatment
Three-Year Rule
• If employee contributions recovered within
36 months of date of first pension payment
• Pension income is not reported until
contributions are recovered
IRS no longer allows three year rule
General Rule
• Percentage is used based on
proportionate share of Contributions to
Total Value of the Pension
• This is applied each year to the Pension
amount received
Use Worksheet A, pg 24, to determine which pension
method to use
2010 Conversions to Roth
• NJ Following the IRS
• Deferred until 2011-2012
• NJ/Fed reporting must be the same
IRA Withdrawals
• Use Worksheet C, Page 26
• Client Record Keeping
– IRA Contributions
– Prior Year Worksheet C
• Roth Distributions
– Exempt if ‘Qualified’ – page 27
Taxable Pension (Line 19)
• Line 19 is for the total of:
– Taxable Pensions (after reduction by
Three-year or General Rule)
– Taxable Annuities
– Taxable IRAs
Gambling Winnings (Line 23)
• Include Casino and Track Betting
• Include NJ Lottery Winnings
– Only with prizes exceeding $10,000
• Substantiated Losses
– Can be used to Net total winnings
Record Keeping - Losses
Substantiated through:
• Daily log
• Journal
• Canceled check
• Losing race track pari-mutuel tickets
• Losing Lottery Tickets
Pension Exclusion (Line 27a)
• Eligibility:
– Age 62/older or Disabled
– Total income of $100,000 or less
• Amounts Based on Filing Status
– $20,000 – MFJ/HOH/Widow
– $15,000 – Single
– $10,000 - MFS
Retirement Exclusion (Line 27b)
Taxpayer may deduct unused Pension
Exclusion from Line 27a if:
Line 14 ___
Line 17 ___
Earned Income
Line 20 ___
Line 21 ___
Total less than $3,000
Gross Income (Line 28)
No Filing Required if:
• $10,000 or less
– Single
– Married/CU - Filing Separate
• $20,000 or less
– Married/CU Filing Joint
– Head of Household
– Qualifying widower
Medical Expenses (Line 30)
• Unreimbursed medical expenses
– Include MSA Contributions (Archer)
• Expenses in excess of 2% of line 28 Gross
Income
Worksheet E, Page 31
Property Tax Deduction/Credit
• Enter total property taxes paid (or 18% rent) on
line 36a
• Include Homestead Benefit received as a credit
• PTR applicants – use base year amount
• Residency Status – Line 36b
– Homeowner/Tenant
Property Tax Deduction/Credit
• Worksheet F
– determines the greater benefit
• Deduction Limited to $10,000
– $5,000 MFS
• Enter Property Taxes Paid on Line 36c or
a flat $50 credit on Line 48
Tax (Line 38)
• Show NJ Tax amount based on taxable
income
• Tax Tables (Pg 53)
• Tax Rates (Pg 62)
Form NJ-1040
Calculating Tax and Payments
Page 3
Credit for Taxes Paid (Line 40)
• Used for NJ Residents who have income
subject to tax out of the state
• Schedule A must be completed
Note: Income must be reported on the NJ-1040
Use Tax (Line 44)
• Purchases out of state
– No NJ Sales Tax
• Estimated Use Tax Chart (pg 39)
– Absent of Purchase Records
Enter 0.00 if no Use Tax is due
NJ Income Tax Withheld (Line 47)
• Form W-2, Box 17 (State Income Tax
Withheld)
• Form 1099-R (Pensions, etc)
• Include amounts from all W-2s & 1099s
received
Note: Be sure W-2, Box 15 Shows ‘NJ’
Earned Income Tax Credit
(Line 50)
• Eligibility
– All NJ Residents who qualify for Federal EITC
are eligible to apply – subject to review
• Calculated Amount
– 20% of Federal EIC amount
Excess UI/DI/FLI (Lines 51 - 53)
• For people with:
– Multiple employers
– Multiple W-2s
– With excess UI/DI/FLI contributions
• Must complete and include Form NJ-2450
with NJ-1040
Underpaid or Overpaid
• Compare Total Payments (Line 54) to
Total Tax (Line 46)
• If Line 54 is greater than line 46, the
difference is an overpayment
• If Line 54 is less than line 46, the
difference is due to the state
Refund Amount (Line 65)
Overpayments can be:
– Left as a credit for next year;
– Donated (all or in part) to various charitable
designations; or
– Refunded to the Taxpayer
Be sure to include requested refund amount on Line 65
Part-Year Residents
• Resident only Part of the Tax Year
• Complete ‘Residency Status’
– Page 1, Form NJ-1040
• Allocate Income
– Just NJ Residency Period
• Pro-Rate Exemptions and Deductions
– by Number of Months in NJ
Property Tax Relief Programs
• Form NJ-1040-H
– Certain filers only
• Homestead Benefit
– Only Homeowners
• Property Tax Reimbursement
– Homeowners/Mobile Home Owners
Form NJ-1040-H
• Property Tax Credit ($50)
– Age 65/Ovr or Disabled
– No NJ Income Tax Return Filed
• Under Filing Threshold
– Did not own Residence on 10/1/11
Homestead Benefit
• Owned/Occupied Residence
– On 10/1/11
• Gross Income Under – regardless of filing status
– $150,000 – 65/Ovr or Disabled
– $75,000 – Everyone else
• Paid as Direct Property Tax Credit
• No Tenant Rebate Application
– Suspended by the State Budget
PTR - Eligibility
• Must be Age 65/ovr or Disabled by
12/31/2010
• NJ Resident for at least 10yrs
• Owned and lived in the home for at
least 3 years
• Have fully paid property taxes due
– by June 1st of following year
Property Tax Reimbursement
Income Eligibility Limits
• 2010
– Single/Married $80,000
• 2011
– Single/Married $80,000
PTR – Income Limits
• Virtually all gross income is included for
PTR eligibility
– Social Security
– Unemployment
– Military Pension
– NJ Lottery Winnings
This will often vary from the income tax form
PTR – First Time Filers
• Form PTR-1 – available online
– Establishes 2010 and 2011 Eligibility
• Reserves Base Year at 2010 Level
• Difference of 2011 & 2010 Taxes
Proof of Property Taxes must be included with all PTR applications
PTR – 2nd and Later Years
• File Form PTR-2
– Comes Pre-Printed with Base Year
• Verifies 2011 Eligibility
• Difference of 2011 and Base Year
Proof of Property Taxes must be included with all PTR applications
Budgetary Approval
• All Property Tax Relief Benefits are
Subject to Change
• NJ FY 2013 Budget
– Passed by June 30th, 2012
Property Tax Relief
Assistance…
• Homestead Benefit
– 1-888-238-1233
• Property Tax Reimbursement
– 1-800-882-6597
• NJ Tax Hotline
– 609-292-6400
www.njtaxation.org
Thanks to our volunteers!