Friday, January 7, 2022

WHAT'S NEW ON THE 2021 NJ-1040


The 2021 state income tax forms, schedules and instructions are now available to view and download at the NJ Division of Taxation website.  Go here.

The 2021 NJ-1040 appears to be exactly the same as the 2020 NJ-1040 with one exception.

For 2021 the NJ Child and Dependent Care Credit is refundable.  To reflect this change you now claim the credit on Line 63 as a component of “Total Withholdings, Credits, and Payments”.

This eligible credit has also been increased and made available to more taxpayers –

NJ Taxable Income          % of the
(NJ-1040 Line 41)        federal credit  

$ 0 - $ 30,000                    50%
$ 30,000 - $ 60,000           40%
$ 60,000 - $ 90,000           30%
$ 90,000 - $120,000          20%
$120,000 - $150,000         10%
$150,000 and over              0%

There is a new option for donating a portion of your refund on the 2021 state return – the Meals on Wheels in New Jersey Fund.  You would claim this contribution as an “Other Designation Contribution” on Line 74 or 75.

There are changes to the NJ Earned Income Tax Credit (NJEITC) for 2021.  According to the 2021 Instructions – “New Jerseyans who are at least 18 and who cannot claim a qualifying child are eligible for the NJEITC even if they are not eligible for the federal credit due to the age limits. The State credit for these taxpayers is calculated based on the federal maximum credit for taxpayers with no qualifying child. A new law also eliminates the maximum age limit for the credit for those who do not claim a qualifying child.”

And the NJ legislature finally adjusted the income threshold for claiming the Retirement Income exclusion for 2021 and forward, although not in the way we had hoped and expected.  A limited exclusion is now allowed for qualifying taxpayers with NJ “Total Income” (Line 27) of between $101,000 and $150,000.

2021 Exclusion Allowed -

$100,001 -  $125,000

    50 %

Married filing jointly

25 %

Married filing separately

37.5 %

Single/head of household/
Qualifying widow(er)

$125,001 -  $150,000

25 %

Married filing jointly

12.5 %

Married filing separately

18.75 %

Single/head of household/
Qualifying widow(er

Over $150,000

No exclusion





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