Friday, January 8, 2021



There are very few changes to the 2020 NJ-1040.  There are three (3) new lines, and other lines have been somewhat revised so that the 2020 return has a total of 78 lines instead of 76.

The three new lines are –

Line 36 – to enter the Organ/Bone Marrow Donation Deduction.  NJ taxpayers who donated organs or bone marrow in 2020 can deduct up to $10,000 in unreimbursed “out-of-pocket” expenses for related travel, lodging, and lost wages.

Line 48 – to enter a “Credit for Employer of Organ/Bone Marrow Donor” for self-employed employers who provided paid time off to an employee who missed work to donate an organ or bone marrow.

Line 63 – to enter the new “Pass-Through Business Alternative Income Tax Credit”.  The amount to be reported here is taken from a new Schedule PTE-K-1 provided by a pass-through entity – i.e. a partnership or a sub-S corporation – or a Schedule K-1 provided by an estate or trust.

As per new tax law –

1) The final phase-in of the increased Pension and Other Retirement Income Exclusion takes effect - the maximum deduction is $75,00 for Single or Head of Household, $100,000 for Married/CU Couple Filing Joint Return, and $50,000 for Married/CU Couple Filing Separate Return.  Unfortunately, the “Total Income” (NJ-1040 Line 27) limitation remains $100,000 – so as little of $1.00 in additional income can cause a NJ taxpayer to pay hundreds or more in NJ state income tax.

2) The 2020 NJ Earned Income Tax Credit (EITC) is increased to 40% of the 2020 federal credit.  And NJ residents who were not eligible for a federal EITC are eligible for an NJ EITC of $215 if they met the following requirements during 2020 -

· did not have a qualifying child; and

· were age 21 to 24 on the last day of the tax year; and

· met all federal EIC requirements except the minimum age requirement. 

3) The 2020 maximum employee contributions to the unemployment, disability and family leave programs, used to calculate any excess contributions based on more than one employer on Form NJ-2450, are much higher than in past years –

Unemployment = $150.03

Disability = $350.74

Family Leave = $215.84 

4) A new tax rate of 10.75% applies to net taxable income over $1 million. 

Go here to download 2020 NJ state individual income tax forms, schedules and instructions.


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