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

TTFN

 

 

WHAT'S NEW ON THE 2021 FORM 1040 (AND 1040-SR)?

 

Here is a review of what is new on the 2021 Form 1040, 2021 Form 1040-SR and 2021 Schedules 1, 2 and 3 –

FORM 1040 –

For 2021 the non-itemizer charitable deduction is “below the line” and NOT “above the line” (like 2020).  This deduction no longer reduces AGI, which is important to note because of the many tax items that are affected by AGI or a MAGI.

Line 10 is limited to “Adjustments from Schedule 1”.

Line 12 has 3 parts –

a. “Standard deduction or itemized deductions”
b.  “Charitable contributions if you take the standard deduction” 
c.  “Add lines 12a and 12b”

The line for entering the Earned Income Credit (EIC) – Line 27 – has been expanded to 3 parts –

a. The actual EIC claimed, with a box to check if you are 18-23 and qualify for the credit
b. “Nontaxable combat pay election” – the amount of pay using to calculate the credit
c. “Prior year (2019) earned income” – if you are using this number to calculate your 2021 credit

Line 28 is expanded to include “Refundable child tax credit”.

FORM 1040-SR –

The same changes made to the Form 1040 also appear on the Form 1040-SR.

SCHEDULES 1, 2 and 3 –

These schedules have all been expanded to specifically identify each applicable “other” item, and are now each two pages instead of one.

1. Line 8 of Part 1 of Schedule 1, for “Other income”, includes a detailed entry for each of the various individual items of other income.  Part II, for “Adjustments to income” removes the line for “Tuition and fees deduction” (no longer an allowable deduction for 2021) and adds a line that is “Reserved for future use” (#22), one for the “Archer MSA deduction” (#23) and one for “Other adjustments” (#24) that includes a detailed entry for each of the various other adjustments to income.

2. Part I of Schedule 2, for “Tax”, remains unchanged.  Part II, for “Other taxes”, is expanded to include a detailed entry for each of the various other taxes, surtaxes and charges.  Line 19 is where you would enter the payback of any overpayment of the advance Child Tax Credit payments from the reconciliation on Form 8812.   

3. Part I of Schedule 3, for “Nonrefundable Credits, expands Line 6 for “Other nonrefundable credits” to include a detailed entry for each of the various other nonrefundable credits.  Part II, for “Other Payments and Refundable Credits”, expands the Line 13 for “Other payments or refundable credits”, to include additional items of payment or credit.

You can go here to download these forms and schedules.  

Most of the other 2021 forms and schedules have also been issued.  We are waiting on the release of the 2021 Schedule A – which is being held up due to the change to the SALT limitation that may be included in the final Build Back Better legislation.   

TTFN

A LITTLE THIS-A, A LITTLE THAT-A

 
+ The IRS has released the 2021 Form 1040 and 2021 Form 1040-SR.  Click here to download these forms as well as other 2021 IRS forms and schedules.

I will review the changes to the Form 1040, Form 1040-SR and Schedules 1, 2 and 3 here at TWTP next week.

+ Here are some more examples of the damage done by the IRS excessive COVID-19 closure – and more proof that the IRS is FU-ed - from fellow tax pros (highlights are mine):

“I e-filed a 1040X in August and it still doesn't show up in "\’Where's My Amended Return?’ Called the e-file service to follow up. Yes, the IRS has it, but expect a 40 week wait time.  I said, ‘I think I misheard you.’  She said, ‘No, you didn't.’ 40 Weeks!” – Jan Roberg

“I am currently quoting to clients for IRS processing time:

Paper-filed amended return: 12-18 *months*
Electronically filed amended return: 8-14 *months*
These both should be weeks rather than months, but this is the world we live in today.” – Russ Fox

"I filed a 2019 amendment in August 2020.  I am still waiting on my refund.  I got the state refund in 7 weeks."  - Steve  

This is unacceptable – but there is nothing taxpayers, or tax professionals, can do about it.

DO NOT contact your tax preparer to ask why you haven’t received your federal refund!

FYI – the IRS is paying interest on late refunds (which is taxable on your 2021 or 2022 return).

TTFN

 

IRS RELEASES DRAFT 2021 TAX FORMS

 

I had been holding these for a BUZZ installment – but there isn’t any other BUZZ to report.

Kay Bell reports that the “IRS releases drafts of 2021 Form 1040 and schedules” and discusses the many changes to these forms at DON’T MESS WITH TAXES.

There has also been a draft version of the 2021 Schedule 8812 released.  This complicated form is used to calculate the Credits for Qualifying Children and Other Dependents to be claimed on the 2021 Form 1040 (or 1040-SR).  It appears to be a real PITA.

TTFN

DOCUMENTING YOUR INCOME AND DEDUCTIONS

 

I expect by now you have prepared and submitted your 2020 federal and state tax returns and are waiting, patiently, for your refunds. 

Did you find it difficult to compile all the necessary 2020 information and documentation to give to your tax preparer?  The more organized you are at tax time the more likely you will be able to take full advantage of all deductions, credits and tax-saving strategies available. And the more organized you are the lower your tax preparation fee.

I have created the 2021 GUIDE TO TAX RETURN RECORDKEEPING to help you in gathering and organizing your 2021 tax “stuff” and help you to pay the absolute least federal income tax possible for 2021.

My guide contains detailed text covering what is taxable and deductible and what information and documentation you will need to properly prepare your 2021 tax return, and forms, schedules and worksheets for compiling and identifying the documentation you will need to provide to your professional tax preparer in 2022.  It discusses in detail –

·         MY BEST TAX ADVICE

·         WHAT TO GIVE YOUR PREPARER

·         WHO MUST FILE A 2021 TAX RETURN

·         FILING STATUS

·         DEPENDENTS AND EXEMPTIONS

·         INFORMATION RETURNS

·         INVESTMENT SALES

·         2021 CONTRIBUTION LIMITS FOR RETIREMENT PLANS

·         REPORTING GAMBLING INCOME

·         ADJUSTMENTS TO INCOME

·         ITEMIZED DEDUCTIONS 

·         DEDUCTIBLE RENTAL EXPENSES

·         CHILD CARE EXPENSES

·         ESTIMATED TAXES

·         HOW LONG MUST I KEEP MY TAX RECORDS

·         YEAR-END TAX PLANNING

The cost of the Guide is only $10.95 sent as an email attachment – the text in pdf format and the forms, schedules and worksheets in Word format.  A print version sent via postal mail is also available for $15.45.

Send your check or money order for $10.95 or $15.45, payable to Taxes and Accounting, Inc, to -

TAXES AND ACCOUNTING, INC

2021 GUIDE TO TAX RETURN RECORDKEEPING    

POST OFFICE BOX A

HAWLEY PA 18428

TTFN 

WHAT'S NEW FOR 2021?

 

While we are waiting for the final results . . . . 

At the end of October, the Internal Revenue Service and the Social Security Administration announced most of the inflation-adjusted and COLA-adjusted numbers for calendar year 2021.  The only thing missing at this point is the 2021 Standard Mileage Allowance amounts.

Each year I compile a “What’s New For . . .” report that in provides in detail all these numbers to help with tax planning for and preparation of Form 1040 (and 1040-SR).  I have just finished compiling my “What’s New For 2021”. 

The cost of “What’s New For 2021” is only $1.00, delivered as a pdf email attachment.  A print version, sent by postal mail, is also be available for $2.00.  I will email those who order this compilation the 2021 Standard Mileage Allowance numbers when they are available.

To order this report send your check or money order for $1.00 or $2.00, payable to Taxes and Accounting, Inc, and your email or postal address (if ordering the print version include both postal and email addresses) to – 

TAXES AND ACCOUNTING, INC

WHAT'S NEW FOR 2021
POST OFFICE BOX A
HAWLEY PA 18428 

                                             
TTFN