Wednesday, January 31, 2018


All state returns (that apply to me and my clients) are now finally up and available at the appropriate state tax agency website.

The 2017 NJ-1040 form was finally made available at the NJDOT website forms page at 11:00 AM on Monday.  As expected, there was no change to the physical format or layout of the form, except for the addition of Line 12c on Page 1 to indicate if the taxpayer and/or spouse or civil union partner is eligible to the Veteran Exemption (although the word exemption is misspelled “exeption”).

From NJDOT – items that will be accepted to document a claim for the new Veteran Exemption:

* DD-214 - Certificate of Release or Discharge from Active Duty

* DD-256 - Discharge Certificate

* WD AGO 53 - Enlisted Record and Report of Separation Honorable Discharge

* WD AGO 53-98 - Military Record and Report of Separation Certificate of Service

* WD AGO 55 - Honorable Discharge from the Army of the United States

* NA Form 13038 - Certificate of Military Service

* NAVCG 553 - Notice of Separation from U.S. Coast Guard

* NAVMC 78PD - U.S. Marine Corps Report of Separation

* NAVPERS 553 - Certificate of Separation/Discharge from U.S. Navy

* County Veteran ID Card - Veteran identification card issued by any of the New Jersey counties

* Federal Veteran ID Card - Veteran identification card issued under the Veterans Identification Card Act

Just a reminder – regardless of when you submit your 2017 NJ-1040 to the state, refunds will not begin to be issued until March 1st.

As for the New York State resident (IT-201) and non-resident (IT-203) returns - the only change to the physical format or layout of the forms appears to be the addition of a Line 60o (IT-201) or 57o (IT-203) to add a new voluntary contribution option for the Veterans’ Home Assistance Fund”, and the addition of a line 79a (IT-201) and 69a (IT-203) to allow taxpayers to allocate via direct deposit all or a portion of their refund to NYS Section 529 college savings accounts via the new Form IT-195.

The NYS standard deduction and tax rate schedules have been adjusted as per the annual COLA.  There have been a fee changes and additions to obscure state credits, but nothing that would affect any of my clients.

The "What's New for 2017" section of the NY state income tax instruction booklets says "A recent law change amended and expanded the definition of NYS source income", but does not explain just how.  When I found out just what the state is talking about I will post it here in a subsequent post.

The biggest issue facing those who file New York State income tax returns going forward – both residents and non-residents – involves the changes made beginning in 2018 via the GOP Tax Act, specifically the “conformity” of the state return to the federal return and a NYS requirement that taxpayers who claim the federal Standard Deduction also claim the NYS Standard Deduction.

The current NYS Standard Deduction for a single filer is $8,000, compared to the $12,000 federal amount for 2018.  And for a married couple is it $16,050, compared to $24,000. 

While NYS does not allow a deduction for state and local income tax or sales tax, it does permit a full deduction for real estate taxes, now limited to $10,000 on the federal return.  Many NJ residents filing a NYS non-resident return and NYS residents pay more than $10,000 in real estate taxes.  And the loss of Miscellaneous Expenses subject to the 2% of AGI exclusion reduces both federal, and conforming NYS, itemized deductions.

It has been suggested that if NYS continues to conform to the new federal rules beginning in 2018 taxpayers who file NYS returns could see a $1.5 billion increase in state tax.

New York is not alone in having to fact this problem.  If the 41 states with an income tax almost all of them at least partially base taxable income on the federal return.  New Jersey and Pennsylvania are exceptions – they do not follow the federal return and have minimal allowable deductions. 


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