The NJ Division of Taxation has released the 2023 state income tax forms and instructions - including the 2023 NJ-1040 and instruction booklet. Click here.
The only changes to the NJ-1040 for 2023 that I can find involve the Shared Responsibility Payment. Line 53 now becomes Lines 53(a) – 53(c).
Click here for a web page
identifying the state income tax changes for 2023.
TTFN
At this past week-end’s NJ-NATP “Famous State Tax Seminar” I was reminiscing with long-time NJ-NATP members and Board members about the early days of the seminar – when the event was held upstairs at the then Woodbridge Hilton (now APA Hotel), which is in Iselin and not Woodbridge, in a much smaller room.
One year, over 20 years ago, then Director of the NJ Division of Taxation Robert Thompson – who left office after being charged with “making discretionary decisions while under undisclosed conflicts of interest caused by their receipt of meals, entertainment, golf outings and other gifts” from OSI, the outside collection agency hired by the NJDOT to collect outstanding NJ taxes – told the assembled NJ tax preparers about NJ’s special sales and use tax audit initiative. This was when the annual “keynote speech” by the NJDOT Director actually provided value.
I still remember two stories Thompson told us back then.
One arm of the audit program would target NJ businesses where pretty much 100% of gross receipts are subject to sales tax – like pizza parlors, liquor stores and taverns. It was not the goal of the program to put the pizza parlors, liquor stores or taverns being audited out of business. The sole purpose was to collect more tax. No criminal or other action was brought against the business by the State and the bill was not overloaded with penalties.
Thompson told of the audit of one pizza parlor, which happened to be located around the corner from the NJDOT headquarters in Trenton. The Division asked the parlor to submit a menu, which was reviewed by the auditors. One auditor then visited the parlor and asked the owner, “How come the menu you sent us says you charge $2.00 for a slice of pizza, but when I come in here for lunch you charge me $2.75?” Apparently, the owner was not too bright!
My favorite of the two stories concerned the program's attempt to collect “use tax” on out of state purchases.
If a New Jersey resident purchases a taxable item in New York and will walk out of the store with that item in hand he/she will pay New York state sales tax on the item, even though the item will ultimately be used in New Jersey, and will not owe any tax to NJ. But if a NJ resident purchases an item from a New York vendor and has the item shipped to a New Jersey address he/she does not pay New York state sales tax at the point of purchase. That person is required to pay a use tax on the purchase to the State of New Jersey. For example, if you order a bracelet from a New York jeweler and have it shipped to your New Jersey address you would not pay sales tax to New York, but you would be liable for New Jersey use tax on the purchase.
The NJ Division of Taxation got a hold of the records of a jewelry store located in New York, just over the NJ border, and made a list of all purchases where the items were shipped to a New Jersey address and no NY state sales tax was paid. The Division then sent a bill for the appropriate amount of use tax due, with the specific purchases itemized, to the registered NJ residences of all those on the list.
One of these bills arrived at the home of a
married doctor and was opened by the doctor’s wife. After she reviewed the bill, she immediately
called the NJ Division of Taxation.
“I have just received a bill for use tax from
the Division of Taxation and I think you have made an error,” she said.
“What is the error,” the DOT employee asked.
“My husband only gave me one diamond bracelet!”
So, the moral of the story – if you are going to give your wife and your mistress the same expensive gift, don’t buy both at the same place at the same time, and be sure to pay state sales tax on the gift for your mistress!
TTFN
This past Saturday I was where I have usually been for most of the past 20+ years – in Iselin NJ at the APA Hotel (formerly Woodbridge Hilton) attending the NJ chapter of the National Association of Tax Professionals’ “Famous State Tax Seminar”.
This annual seminar is a “must attend” for any tax professional who prepares New Jersey state income, sales or payroll tax returns.
While I am retired, I still prepare returns for a few family members and long-time personal friends, and I do write a newsletter of tax planning and preparation advice, information and resources for NJ taxpayers and continue to occasionally post about NJ and NY state taxes here at THE WANDERING TAX PRO – so attending this seminar still has value for me.
Saturday was the first “in-person” presentation of this seminar since before the COVID pandemic. I was truly glad to get “back to normal”. I have always preferred in-person CPE to online webinars for a variety of reasons, and enjoyed seeing old friends from the NJ-NATP chapter administration (and, of course, Dave Steiner).
Following the traditional schedule for this offering, after a buffet breakfast (unfortunately truly very “skimpy” this year – in the past the breakfast buffets were much more “meaty”) and introductory remarks by NJ-NATP, a “keynote” speech is presented by the current head of the NJ Division of Taxation, this year again (still) Acting Director John Ficara, followed by presentations on New Jersey individual and business tax and state property tax relief program updates and occasionally other relevant state topics by NJDOT’s “Taxation University” and NY state tax updates and a review of federal tax changes by Kathryn Keane, with a buffet lunch provided at the appropriate hour (thankfully, unlike the breakfast offering, this year’s lunch buffet was excellent).
As I say each year in my review of this event, “While I appreciate Mr. Ficara’s support of NJ-NATP and his willingness to participate in the seminar, this presentation . . . is usually of little value” (to quote my review of last year’s virtual event). Again, no real value this year, although Mr. Ficaro did tell us that there will soon be substantive improvements to online access of taxpayer information – which is good news.
The “Taxation University” presenters were familiar faces, with one new addition. In addition to the usual updates, the NJ topics presented included “Helping Delinquent Taxpayers”, “Changing the Tax Treatment of LLCs” and “Making and Changing S-Corp Elections”.
Several of the items discussed by the NJ Taxation University speakers – mostly concerning business return issues and the state “BAIT and switch” scam – were of no personal value to me, so I paid little attention. But these topics were informative and relevant and certainly worth including in the seminar.
Here are some “take-aways” from the NJ update presentations –
* The new up to $10,000 deduction for a contribution to a NJBEST 529 account is available to any person who actually makes a contribution. You do not have to be the “owner” of the account, and the beneficiary of the account to which a contribution is made does not have to be a dependent. A grandparent who contributes $5,000 to a NJBEST account for a grandchild, who is not a dependent, can claim a $5,000 deduction on the 2022 NJ-1040.
* The $200,000 NJ Gross Income threshold for claiming any of the three new “New Jersey College Affordability” deductions, which includes the NJBEST contribution deduction, applies to each NJ-1040, regardless of the filing status claimed on the return. It is the same for Single, Head of Household, Married filing Joint, and Married filing Separate taxpayers. This provides a tax-saving opportunity for married couples who file separately, and could in itself be a reason for filing separate returns (this is my observation and was not mentioned in the presentation).
* Beginning in 2023 a valid federal election by a corporation to be considered a “sub-chapter S” entity automatically applies to NJ state filing. Corporations who want to be taxed as “sub-S” entities no longer have to submit a separate NJ state election.
* As usual, refunds on 2022 NJ-1040 returns will not be mailed out until March, regardless of how early the returns is submitted.
* The 2022 Property Tax Reimbursement (aka “Senior Freeze”) PTR-1 and PTR-2 applications will be mailed out, as usual, in late February. Reimbursement checks will begin to be mailed out on July 15th. The Income Limits for the 2022 applications are 2022 income = $99,735 and 2021 income = $94,178. There is, so far, no budget-balancing reduction of either year’s amount to $70,000, as had been common in the past. Qualified NJ homeowners will be able to submit 2022 PTR-1 and PTR-2 applications online via the NJDOT website, although the system for doing so has not been set up yet.
* All of the new ANCHOR program benefits (ANCHOR replaces the former NJ Homestead Benefit, which had replaced the former NJ Homestead Rebate) will be paid by a check mailed to qualifying applicants. The benefit amount will no longer be sent to the applicable municipalities and applied as a direct credit to a quarterly property tax payment. In my opinion this is not good, and in some cases could result in a federal tax issue.
* The current ANCHOR benefit applies to a NJ resident’s status on October 1, 2019, and the income threshold is based on the NJ Gross Income reported on the 2019 NJ-1040. Several past clients had emailed me to ask what their 2019 NJ Gross Income was, as this number was asked for on the application form. We were told at the seminar that it really does not matter what number you enter on the application for your 2019 NJ Gross Income as long as you actually filed a 2019 NJ-1040. If you did the state already knows your 2019 NJ Gross Income. You can enter an estimated number, or pull a number out of your hat, and the application will not be rejected or delayed.
There was really nothing new of any consequence for the basic or average 2022 IT-201 and IT-203. And most of us were already familiar with the federal tax changes for 2022 from other CPE offerings or online reporting. But Kathryn did tell us an amazing story from the 2022 NATP in-person national conference that shows the inefficiency of IRS processing of amended returns – and why it could take almost 2 years to get a refund, even if the amended return was filed electronically (thankfully the IRS pays interest).
One thing from all past in-person offerings was missing this year. There were no vendor tables. And, one more thing. The items raffled off by the chapter after lunch really had no substantive value – in the past the “prizes” were worthwhile (like free registrations to chapter or national events and tax books).
As I always say, the value of this type of seminar for a tax professional depends on the amount of relevant tax law and regulation changes that apply to current or potential clients. There were really not too many changes for 2022 returns.
But, also as always, NJ-NATP did a good job and the chapter Board and volunteers certainly deserve the usual “kudos”.
Fellow attendees – did I miss anything important?
TTFN
The 2022 New Jersey state income tax forms, schedules and instructions are now available at the NJ Division of Taxation website. Click here.
There are a few changes that are effective for tax year 2022 – some new tax benefits are available on the 2022 NJ-1040. Click here to see what is new for 2022.
There are only two changes to the 2022 Form NJ-1040 -
Line 37 (a), (b) and (c) reports the new NJBEST deduction.
Line 65 reports the new NJ Child Tax Credit of up to $500 for each dependent child age 5.
TTFN
New Jersey has replaced the Homestead Benefit property tax relief program with ANCHOR – Affordable New Jersey Communities for Homeowners and Renters.
The 2022 program is for NJ residents who were a homeowner or resident on October 1, 2019. The amount of the benefit payment is based on the NJ Gross Income from the taxpayer’s 2019 NJ-1040 Line 29.
Homeowners with 2019 NJ Gross Income of $150,000 or less will get $1,500 and those with 2019 NJ Gross Income of $150,001 - $250,000 will get $1,000. Tenants with 2019 NJ Gross income of $150,000 or less will get $450.
The total amount of all property tax relief program benefits for a taxpayer – ANCHOR, Property Tax Reimbursement and any tax reduction for seniors, veterans and the disabled – cannot be more than the total property taxes paid on his or her primary residence for the year.
Homeowners whose residence was exempt from local property taxes and those who made “Payments in Lieu of Tax” and tenants who lived in tax-exempt, subsidized and campus apartments do not qualify for the benefit payment.
Payment of the benefit will be via either direct deposit or paper check. Benefit payments applied for this year are expected to be paid in May 2023.
As with the Homestead Benefit, residents will be sent an application package and can apply either online or by phone. Some residents may be required to file a paper application. The deadline for filing an ANCHOR application is December 30, 2022.
Applications will be sent out next month. Here is a chart of the mailing schedule for the application packages-
|
COUNTY |
MAILING TO BEGIN |
|
Burlington,
Hunterdon, and Mercer |
September 12,
2022 |
|
Atlantic and
Essex |
September 14,
2022 |
|
Bergen and Warren |
September 16,
2022 |
|
Ocean, Salem, and
Sussex |
September 19,
2022 |
|
Cumberland,
Gloucester, and Hudson |
September 21,
2022 |
|
Monmouth and
Somerset |
September 23,
2022 |
|
Passaic and Union |
September 26,
2022 |
|
Cape May and
Middlesex |
September 28,
2022 |
|
Camden and Morris |
September 30,
2022 |
The ANCHOR application is NOT an income tax form and has nothing to do with state income tax. While your tax preparer may be willing to assist you with the application process do not expect him or her to file it for you.
TTFN
Have you filed your 2021 tax returns yet? If not (this does not work on an amended return) before doing so you should purchase and read my special report AVOID NEW JERSEY TAXES LEGALLY to find out how to save from hundreds of dollars to thousands of dollars in NJ state income tax (and maybe some federal tax as well), depending on the extent and source of your individual incomes.
This report includes several historical real-life examples from my tax practice (I have been preparing NJ-1040s for as long as there has been a NJ-1040 and recently retired after completing 50 tax seasons) of how I used a special strategy and loophole to save my clients hundreds to thousands of dollars in NJ state income tax and a special worksheet to use to calculate your tax savings.
It also briefly discusses other ways to legally avoid NJ state income taxes.
I will send you this special report for $6.99 plus $1.80 postage and mailing – a total of only $8.79.
Send your check or money order (payable to TAXES AND ACCOUNTING, INC) for $8.79 and your postal mailing address to –
TTFN
As I say at the beginning of a new special report I have just completed – AVOID NEW JERSEY TAXES LEGALLY – “I have been preparing NJ-1040s for as long as there has been a NJ-1040.”
This new report explains in detail a tax strategy a NJ married couple can use to legally save up to $300+ in NJ state income taxes. And perhaps save some federal income tax as well.
And it also identifies a special, I expect unintended, loophole in NJ state tax law that older married couples can use of to save as much as $2,500 in state income taxes.
The people who enact federal and state tax law – the members of Congress and state legislatures – have absolutely no concept of the practical application of the tax laws they pass. In most cases they do not even read the legislation – they just do what the Party leadership tells them to do. In this report I show you how to take advantage of the ignorance and laziness of the NJ legislature to put hundreds or thousands of dollars in your pocket.
This report includes several real-life examples of how I used this strategy and loophole to save my clients hundreds to thousands of dollars in NJ state income tax over the past few years and a special worksheet for your personal use. It also briefly discusses other ways to legally avoid NJ state income taxes.
If you have not yet filed your 2021 NJ-1040 – you have requested an extension – you can use this strategy and loophole to reduce your 2021 state tax liability. If you have already filed your 2021 return you can use this report to save for 2022 and beyond.
I will send you this special report for $6.99 plus $1.80 postage and mailing – a total of only $8.79.
Send your check or money order (payable to TAXES AND ACCOUNTING, INC) for $8.79 and your postal mailing address to –
AVOID NJ TAXES LEGALLY
TTFN
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.
TTFN
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 –
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/
|
|
$125,001 - $150,000 |
25 % |
Married filing jointly |
12.5 % |
Married filing separately |
|
18.75 % |
Single/head of household/
|
|
Over $150,000 |
No exclusion |
|
TTFN
