Monday, January 28, 2019
WHAT’S NEW FOR 2018 TAX FORMS – NEW JERSEY
The instructions for the 2018 NJ-1040 is now available to download at the NJDOT website. Click here.
Both the NJ-1040 form and the instruction booklet have been totally rewritten.
The cover of the instruction book is the same, but almost everything inside is different. The revised instruction book is, in my opinion, far superior to the old one.
While as of this writing the actual 2018 NJ-1040 and supplemental schedules are still not available on the NJDOT website (although the instructions are – is a puzzlement), NJ taxpayers have begun to receive the 2018 NJ-1040 booklet in the mail, and a client scanned and emailed me a copy of the new 2018 forms.
The 2018 NJ-1040 is four pages – the old NJ-1040 was only three pages. And the numbering of the entries has been revised. The content of the NJ-1040 has not changed, other than a change in the way the deduction for exemptions is calculated on Page 1 and to add lines for the two new credits I identify below and some additional voluntary contribution options. Taxpayers, and paid preparers, now sign on the bottom of Page 4 instead of Page 1.
Above the signature on Page 4 is a new section where taxpayers must indicate whether or not the taxpayer and spouse, civil union partner or domestic partner have health insurance on the date you file the return. Filling in, or not filling in, the ovals in this section will not affect in any way the 2018 NJ-1040 – I expect those who do not fill in the appropriate ovals will receive correspondence from the state later in the year discussing health coverage options. As I explained in detail in my earlier post “The NJ Health Insurance Mandate”, beginning January 1, 2019, New Jersey will require its residents to maintain health insurance, and will penalize residents who do not, or who do not qualify for an exemption.
As with the new instructions, the revisions to the NJ-1040 are, in my opinion, an improvement.
The old one-page Schedule A and Schedule B, which had nothing to do with the federal Schedules A or B, has been replaced by Schedule NJ-COJ (Credit for Income or Wage Taxes Paid to Other Jurisdictions) and Schedule NJ-DOP (Net Gains or Income From Disposition of Property), now on separate pages. As with the NJ-1040, the actual content of the schedules has not changed. The NJ-COJ is just bigger in size, and the NJ-DOP listing of individual sales adds many, many more lines for entries.
I have not seen the 2018 NJ-BUS-1 and NJ-BUS-2, but I expect there is no change to these schedules.
The one-page NJ-1040-H, for NJ taxpayers who are not required to file a NJ-1040, is now a two-page NJ-1040-HW. Part I on the front page is to claim the refundable Property Tax Credit and Part II on the back is to claim the new refundable Wounded Warrior Caregivers Credit discussed below.
Here is what is new for NJ state individual income taxes for 2018 -
(1) A new top tax rate of 10.75% is created for NJ taxpayers with income of more than $5,000,000, regardless of the taxpayer’s filing status.
(2) The Pension Exclusion and Retirement Income Exclusion combined for NJ taxpayers age 62 or older or disabled under Social Security with Total Income of less than $100,000 is –
Single or Head of Household = $45,000
Married Filing Joint = $60,000
Married Filing Separate = $30,000
(3) The maximum deduction for property taxes is increased from $10,000 to $15,000.
(4) There is now a non-refundable state Child and Dependent Care Credit for families with qualified dependents and New Jersey Taxable Income of less than $60,000 who are allowed to claim the federal Child and Dependent Care Credit.
A qualifying individual can be a child under age 13 or a spouse or dependent who lived with the taxpayer for more than half the year and is physically or mentally incapable of self-care.
The amount of the New Jersey credit is a percentage of the taxpayer’s federal Child and Dependent Care Credit and is based on New Jersey Taxable Income -
If NJ taxable income is: The NJ-1040 credit is:
Not over $20,000 50% of federal credit
over $20,000 to $30,000 40% of federal credit
over $30,000 to $40,000 30% of federal credit
over $40,000 to $50,000 20% of federal credit
over $50,000 to $60,000 10% of federal credit
The maximum New Jersey credit cannot exceed $500 for one qualifying individual or $1,000 for two or more qualifying individuals.
(5) The NJ Earned Income Tax Credit is 37% of the federal tax credit.
(6) There is a new refundable Wounded Warrior Caregiver Credit for a taxpayer with NJ gross income of less than $100,000 who provided care for a relative who is a qualifying armed services member.
A qualifying armed services member is a person who:
* was honorably discharged or released under honorable circumstances by the last day of the tax year, and
* has a disability arising from active U.S. military service in any war or conflict on or after September 11, 2001, and
* has either a 100% disability rating or receives individual unemployability benefits, and
* lived with you in New Jersey for at least six months of the tax year.
The credit is the lessor of 100% of the federal veteran disability compensation or $675. It is calculated on a new Schedule NJ-WWC.
This credit, like the NJ Earned Income Tax Credit, is refundable. As with the NJEITC, this credit is included in “Total Withholdings, Credits and Payments” on the NJ-1040. If qualified caregivers have no NJ state income tax liability, or claiming the caregiver credit reduces their liability below 0, they will receive the full credit or the difference in their refund.
(7) New Jersey will not allow the highly publicized and highly convoluted and complicated federal 20% Section 199A deduction for “pass-through” business entities, including federal Schedule C or C-EZ filers, on the NJ-1040.
2018 is the 2nd year that honorably-discharged veterans can claim a special additional $3,000 exemption on the NJ-1040. If you provided the NJ Division of Taxation with documentation of your honorable discharge last year you do not have to include the documentation again with your 2018 return.
For those of you who file your NJ-1040 free online using NJWebFile, the NJDOT website tells us - “The NJ WebFile application will begin accepting 2018 NJ Tax Returns on or about Wednesday, January 30, 2019”.
Once again, the NJ Division of Taxation will be taking steps to protect New Jersey taxpayers from refund fraud and identity theft. These efforts will, like last year, result in state tax refunds not being issued until March 1.
I will let you know when the actual 2018 forms and schedules are available online at the NJDOT website.