Friday, August 17, 2007


I recently received two email questions regarding New Jersey issues – one from a “second-generation” client and one from a stranger who had come across my website while doing an online search.
The client, who had purchased her first home in 2006, wanted to know - “Is there is a limit on the percentage your property taxes can be raised for your home each year.”
I answered – “As far as I know there is currently no statutory limitation on annual increases to real estate taxes. Corzine may have talked about it at one point, but I am not aware of any law. From what I have seen in the past few years municipalities can raise taxes as much as they like. Senior citizen homeowners have some protection with the "Senior Freeze" property tax reimbursement program - but "normal" taxpayers get no relief.”

As referred to in my response, I have noticed over the past two tax filing seasons that the property tax deductions of NJ homeowners have increased dramatically – and at the same time the amounts of the homeowner rebate checks for non-senior and non-disabled homeowners have decreased dramatically. The new rebate program, renamed the Homestead Rebate, promises much higher rebate checks this year. Although the money for the increased rebates will have to come from somewhere – the NJ legislature would never think of reducing spending, only increasing taxes, fees, surcharges, etc – so the money will come out of one pocket and go into the other.

In the “old days” you could always tell when it was the local election year in Jersey City, New Jersey – the real estate taxes would go down!

The other email read – “What a wonderful service you are providing by making your website such a resource of tax information. I learned so much by reading through it. I wonder if you could answer a quick question concerning the Homestead Rebate/Fair Tenant Rebate. I tried asking the State, but keep getting a run-around. If a person was qualified to file a Fair Tenant Rebate for 2004 and 2005, but didn’t do so, could these be filed now and be paid retroactively?”

My answer – “Thanks for the kind words. I glad you found my website helpful. As far as I know, if you did not file an original tenant rebate application (TR-1040) for 2004 and 2005 with your 2004 and 2005 NJ-1040 filing it is too late to do so now. There is a Form TR-1040-X (Amended Fair Rebate Application) for 2004 and 2005, but these forms are only if you actually filed an original 2004 or 2005 TR-1040 - and not to submit an original 2004 or 2005 application. So it looks like you are out of luck.”

The application for the NJ tenant’s rebate is submitted by filing Form TR-1040 with your 2006 NJ-1040. According to the NJ-1040 instructions, “A tenant who is not required to file a NJ income tax return (because of income below the minimum filing threshold) and meets the qualifications for a tenant homestead rebate may file only Form TR-1040 to claim a rebate. It is not necessary to file the NJ-1040 along with the tenant rebate application.” If you are filing only the TR-1040 you have until October 31, 2007 to file.

The first round of tenant rebate checks has already been mailed out. The maximum rebate for a qualified non-senior and non-disabled tenant has been increased from $75.00 to $350.00.

The email mentioned “getting the run-around” when calling the NJ Division of Taxation with a question. My advice is never call the State if you have a question. Over the years clients and others who have done so have been given totally false answers to specific questions. Ask your tax professional. Or you can email the state at

I never call a state or federal tax agency – I have been “burnt” too often in the past. I require that all contact be made either via postal mail or email so that I have documentation of any representations made by the agency. I almost never receive the courtesy of a written response to my postal correspondence to the NJ Division of Taxation (unless I write to a specific person – generally higher up on the chain of command) – although most times the issue addressed in the correspondence is taken care of. I have found lately that I get a prompt and, for the most part satisfactory, response to specific client questions and issues from the NJDOT by using the above email address.

While on the subject of New Jersey taxes, as I probably mentioned in a posting last year, every single client, without exception, who had a balance due on a 2005 NJ-1040 I submitted online using NJWebFile was double-billed for the amount due (a balance due notice was sent to the client in August of 2006), even though the balance due had been originally been paid on time and the client had a cancelled check. What the state did was apply the payment to tax year 2004 and not 2005. Most clients either contacted the NJDOT directly or emailed me and I contacted Trenton to explain the error. Recently, in the course of preparing one of the GD extensions, I discovered that the client had simply paid NJ the amount requested without notifying me.

Two things:

First - I am required by law by the State of New Jersey to file all full-year resident NJ-1040s electronically, unless the client provides me with a signed “OPT-OUT” form. I am not a federal “ERO” (Electronic Return Originator) and I do not file federal returns electronically (and will not do so until the federal government either provides me with free software or allows one to do so free online, like NJ does with NJWebFile). I do not use software to prepare tax returns – I do all 400+ manually. So the only way I can comply with the law is to use NJWebFile, which I do whenever possible or feasible. If the State of New Jersey wants me to file all my NJ-1040s electronically the least they can do is make sure that the system to do so actually works properly! This year I filed all balance due NJ-1040s manually, and got a signed OPT-OUT form from the client.

Second – Whenever you receive a balance due notice, or any correspondence, from the IRS or a state tax agency send it to your tax preparer immediately! Do not just automatically pay any balance requested. If you prepared the return yourself you should contact a tax professional. Over the years I have found that more than 50% (and that is conservative – it is more like 75%) of balance due notices received from the IRS or the state are incorrect! When I found out that the client had double-paid her 2005 NJ state income tax I immediately emailed the NJDOT with copies of both cancelled checks attached.
Those of us who live in the Garden State are well aware of just how expensive a proposition it has become. Check out my earlier posting on “

Any questions about New Jersey taxes or rebates?



outofstateworker said...

I received an Statment of underpayment from NJ. They neglected to include the taxes on my W2 that was withheld for NJ. I live in NY and work part of the year in NJ. My return and W2 clearly stated the NJ taxes withheld. NJ is assessing a penalty, my question is since NJ actually owes me money (refund) do they now have to pay a penalty to me?

Robert D Flach said...


If you owe money to the State of New Jersey it will charge you interest. You would think it only fair that if it owes you money it would also pay you interest. The IRS does in such a situation.

However this is the State of New Jersey. As I have posted before, what's good for the goose is not good for the gander!

Don't hold your breath waiting for the State of New Jersey to pay you interest on a refund they erroneously withheld and paid to you late.