This past Saturday I was where I have been the same time this year for the past 30+ years, with one or two exceptions. I was in the audience of the annual “Famous State Tax Seminar” presented by the NJ chapter of the National Association of Tax Professionals (I was a founding member of the chapter).
As the title suggests, this annual “must-attend” event for tax pros who prepare NJ and NY state tax returns for clients is an update on the changes to state tax law for New Jersey and New York resident and non-resident taxpayers to prepare us for the upcoming tax filing season It discusses individual and business income tax, payroll, sales and inheritance/estate taxes, the NJ property tax relief programs, and often touches on federal tax changes.
Although I have officially retired from preparing tax returns, I still write about federal and state taxes and continue to prepare 1040s and state returns for family and close personal friends.
Unfortunately, the seminar was “virtual” again this year – an online “webinar” – due to COVID. Like most of my generation of tax pros (I started in 1972) I prefer in-person continuing professional education (CPE). Being “virtual” apparently did not substantially limit participants – it was announced at the beginning of the seminar that more than 170 tax pros had registered for the event. It is expected that this event will return to being in-person next January.
An FYI – my personal interest in (and attention paid to) CPE topics is limited to issues related to my specific clients. For the last several years this has been restricted to individual income tax issues – in this case NJ-1040 and IT-201 and IT-203 filings.
The webinar began, as usual, with greetings and opening remarks from NJ-NATP President Josh Mellum (I like the beard). Followed, again as usual, by the “keynote” presentation from John Ficara, the Acting Director of the NJ Division of Taxation (why still “acting”). While I appreciate Mr. Ficara’s support of NJ-NATP and his willingness to participate in the seminar, this presentation, thankfully limited to 15 minutes, is usually of little value. However, this year was different, as he reported on the Division’s operational response to COVID issues. Thankfully, unlike the IRS, the NJDOT did not shut down in 2020. Employees continued to work “remotely”. Mr. Ficara announced NJDOT should return ti full worksite operations during the upcoming tax filing season.
Next was the real “meat” of the event – NJ state tax updates presented by members of NJDOT’s “New Jersey Taxation University”. NJTU has proven to be the most consistently competent, informed, ethical, and cooperative component of the Division of Taxation. Tilesha McCall provided individual updates, Solange Pimental discussed the state’s Property Tax Relief Programs (Homestead Benefit and Property Tax Reimbursement), Abra Watson tacked CBT updates (which apparently replaced the sales tax update presentation that had been listed on the printed seminar agenda), and Mike Kovacs explained in detail the relatively new NJ BAIT program. BAIT (Business Alternative Income Tax) is New Jersey’s legal scam to assist NJ taxpayers in evading federal income tax.
Here are highlights from the webinar that relate to the 2021 NJ-1040 –
* The initial filing deadline for the NJ-1040 is the same as that for the federal return – April 18, 2022. For 2020 returns NJ is following the IRS on the extended deadline for taxpayers who were affected by Hurricane Ida – the original January 3rd extended filing deadline has been further extended to February 15th.
* As in the past, NJ will not begin to issue refunds for 2021 NJ-1040s until March 3, 2022, regardless of when the return was filed.
* COVID-related stimulus, unemployment, “EBT” (Economic Benefit Transfer), PPP loan, and NJEDA and local grant payments and cancellation of debt continues to not be subject to NJ state income tax. These payments are not reported anywhere on the NJ-1040.
* Changes to the Retirement Income Exclusion (the Pension Exclusion and the Other Retirement Income Exclusion) for 2021 and beyond have been discussed in a previous TWTP post.
* Changes to the NJ Child and Dependent Care Credit have been discusses in a previous TWTP post. For 2021 there is no limit on the amount of the allowable NJ credit – previously the state credit was limited to $500 or $1,000.
* Changes to the NJ Earned Income Tax Credit have been discussed in a previous TWTP post.
* As usual, excess employee contributions to the various state benefit funds resulting from having more than one employer in 2021 can be claimed as additional state income tax withholding on the NJ-1040 via Form NJ-2450. The maximum employee contributions for 2021 are:
· Unemployment Insurance = $153.85
· Disability Insurance = $649.54
· Family Leave Insurance = 386.96
There were no real changes to the Property Tax Relief (aka “Senior Freeze”) program. Here is what you need to know about the 2021 PTR-1 and PTR-2:
The income limitations are –
· 2020 = 92,969
· 2021 = 94,178
Thankfully, the 2020 income limit was not reduced to $70,000 by the state legislature to balance the budget, as had been done in past years (2010 – 2017).
The filing deadline for the applicable PTR form is October 31, 2022. The application booklets will be sent out in mid-February and checks will be issued beginning on July 15, 2022.
There was no change to the application and distribution of the Homestead Benefit.
Unlike in-person offerings, there was no actual “lunch break” for this webinar. We all had lunch at our desks while continuing to watch the presentations. As an aside, the breakfast and lunch offerings at the in-person Famous State Tax Seminars held at what used to be known as the Woodbridge Hilton, actually in Iselin NJ, were consistently the best meal offerings of any CPE event I have attended in my 50 years in “the business”.
The last NJDOT presentation before leaving New Jersey was a Discussion Panel, new last year, which is an excellent addition to the seminar agenda (one I had recommended in past reviews). Christina Quinones moderated a panel of NJDOT upper management to discuss systemic, operational and procedural issues. I was glad the panel once again included NJ-NATP’s old friend Jake Foy (I also liked his beard). Unfortunately, Jake’s screen view was fuzzy due to excess light coming from his windows. Another aside – I miss past presenters Alexis and, of course, John Kelly.
I like that we could submit questions for the panel prior to the event. As a component of this annual seminar, due to time constraints, it is, however, important that the seminar planners carefully review the submitted queries and consolidate similar and related questions to compose one edited question per specific topic.
Actually, there would be real value in a separate full-day in-person seminar with two NJDOT panels – one in the morning to respond to systemic, operational and procedural issues and another after lunch to answer questions and provide clarification on actual state tax law. NJ-NATP Board – are you listening?
The seminar ended, as it always does, with presentations by veteran tax pro and long-time NJ-NATP friend, and, like me, honorary member Kathryn Keane, EA of New York.
While having state tax updates presented by official representatives of the NJDOT is important and valuable, there is also value in a review and interpretation of updates by an experienced tax preparer, who can discuss the practical application of tax law changes.
There is not much new for the 2021 New York IT-201 and IT-203 forms, except for these items:
* New York now has a PTET (Pass Through Entity Tax), which is the Empire State’s version of NJ’s BAIT scam.
* New York continues to decouple from federal tax law changes. It currently does not follow the temporary or permanent federal changes to the Earned Income Tax Credit (EITC).
* There is a new NY Real Property Relief Credit of between $250 and $350 that is calculated on NY Form IT-229. The NY itemized deduction for property tax paid that is claimed on IT-196 is reduced by the amount of the credit claimed on IT-229.
Lately Kathryn has also given a presentation on federal updates at this seminar, which I feel is actually unnecessary and not applicable to the event’s purpose. This year’s presentation, titled “Post Pandemic Practice Management”, provided a different, more practical and interesting take on federal issues.
KK told us that, interestingly, the IRS did not see a reduction in Schedule A mortgage interest deductions as a result of the GOP Tax Act’s elimination of the deduction for home equity interest. As I expected taxpayers and tax preparers are not properly complying with this tax law change (one that I actually support).
And she reminded us that the $300/$600 non-itemizer deduction for charitable contributions is for cash contributions only, and does not include non-cash contributions such as donations of clothes or household items to Goodwill, the Salvation Army, etc.
There were minimal technical issues with the virtual offering this year. A “commercial” for one of the event sponsors ran occasionally during the webinar, replacing the tables manned by sponsors outside the “classroom” at in-person offerings. And “Quick Poll” questions popped up throughout the day, a tool to verify the “attention” and “presence” of the participants for CPE credit purposes. The results of the polls were also shown.
There was one interesting, but not surprising, poll result. 59% of the tax pros “in attendance” still have clients who are waiting for their 2020 Form 1040 (or 1040-SR) to be processed by the IRS.
The presenters were, as usual, good and experienced speakers, highly knowledgeable in their topics. And the presentations were comprehensive. The true value of this type of seminar is based on the extent of the changes to state tax law, regulations and procedures, and, of course, the extent the presentation content is relevant to a tax pro’s specific practice and clientele. While the value to me personally, considering the limitations of my specific practice, may not have been especially high, it is important that the topics I am not interested in be presented at this seminar each year and the value for the average practitioner, and especially the newer one, was certainly very high.
I do believe that it is also important that the seminar content remain primarily true to the intended purpose of providing updates on changes to state tax law, regulations and procedures for the current tax filing season. Comprehensive reviews and discussions of ongoing continuing tax law are topics for other offerings.
Once again kudos to the NJ-NATP Board, the NJ Taxation University and KK!
FYI – next year’s Famous State Tax Seminar is scheduled for Saturday, January 14th and is expected to be, and I sincerely hope it is, an in-person event.