Header Right

NJ Employers- August Deadline to Reduce Unemployment Rates

by

Did you check your NJ SUI rates?

On July 28, 2017, the annual Notice of Employer Contribution Rates were mailed to all New Jersey employers. This is not a bill, but rather a summary of the way the NJ Department of Labor calculates the employer contribution rate for unemployment and disability. This form enables you to determine whether a voluntary contribution would save you money in the subsequent year.

Can I reduce the NJ SUI rate?

A voluntary contribution increases your reserve balance and may reduce your contribution rate. Each employer should calculate the amount of the voluntary contribution required to reduce the rate. The required voluntary payment should be compared to the savings realized from a lower rate.

The unemployment expense is a substantial component of your labor cost. Business owners should give it careful attention. If you wish to make a voluntary contribution to your reserve balance you only have 30 days from the notification date to do so. We recommend that you verify all the NJ DOL calculations including the amount of the employer contributions and the benefits charged to your account. Report any discrepancies to the NJ Dept. of Labor. 

Checked your TWES Account?

Good news…if you didn’t receive the Notice and have a Tax Web Enabled System (TWES) account online – you can find your contribution rates there as well. The TWES system provides a wealth of information allowing employers to review their account status, open balance, payment history, employer and worker contribution rates, credit balance and any delinquency.   You can log on to the TWES website at https://my.state.nj.us/

Remember – doing your summer homework now may save you money down the road!

If you would like assistance in determining if a voluntary contribution will save you money, please do not hesitate to contact us immediately.

 

NJ Tax Amnesty: Cool Savings Despite Sizzling Summer Heat

by

 Businesses and individuals facing unpaid NJ tax liabilities may be able to get a break on penalties according to the tax amnesty measure signed into law on July 1, 2018. The amnesty period will not begin before November 1, 2018 and will end by January 15, 2019. The program will apply to state tax liabilities for tax returns due on and after February 1, 2009 and prior to September 1, 2017. The measure will apply to all state taxes including gross income, corporate business tax and sales and use tax. However, it does not apply to unemployment type taxes administered by the Department of Labor. 

Why should I do this now? Because under this limited-time offer (remember, the clock runs out by January 15, 2019) the Division of Taxation will forgive all penalties, and one-half of the accrued interest due at Nov. 1, 2018. 

Here are some more details

    • The program will also apply to amounts currently under audit or being contested with the NJ Div. of Taxation.
    • A start date for the program has not yet been announced.
    • NJ Amnesty will provide relief for 2009 – 2016 delinquent individual or business tax return filers.
    • The program also forgives all penalties and 50% of interest for delinquent sales and use tax filings for quarters ending Dec. 31, 2009 – June 30, 2017.

Is there a hitch?  Sort of. The bad news is that if a taxpayer is eligible for amnesty and does not take advantage of it, an additional 5% penalty will be added to the already imposed penalties and interest on the original tax liability.

To see if this program is right for you, please contact our Tax Manager, Steven Citron

 

 

NJ Budget Increases Real Estate Tax Deduction!

by

What’s In the 2019 NJ Budget…and What Does it Mean for You?

While New Jersey residents have been busy surviving the summer heat….Governor Phil Murphy and NJ State lawmakers reached a

Increased Real Estate Tax Deduction

budget deal before the commencement of the fiscal year beginning July 1, 2018.

 

  • NJ residents will now be able to deduct up to $15,000 per year of property taxes. Historically the deduction was limited to $10,000.
  • Approximately 500,000 New Jersey residents who are eligible for the Earned Income Tax Credit will see a small increase of about $53. The budget included funding for the first of a three-year increase from 35% of the federal tax credit to 40%.
  • About 70,000 State residents will become eligible for a new tax credit to help pay for child and dependent care. This credit is aimed at households with income below $60,000.
  • The State’s sales tax rate will not increase but will remain at 6.625%.
  • The budget restores $150 million to the Homestead Property Tax Relief program
  • Plastic and paper bags will be taxed at 5 cents per bag
  • NJ will begin collecting a 50-cent surcharge on solo rides and 25 cent surcharge on shared rides for Uber and Lyft

 Anything else I should be aware of?

New Jersey is planning a 90 day amnesty program through which delinquent taxpayers will have an opportunity to obtain compliance with the Division of Taxation and reduce interest and penalties on their outstanding tax liabilities.  Program details are expected at a later date.  For assistance, please contact our Tax Manager, Steven Citron.

Act Before March 6, 2018 to Reduce 2017 Estate & Trust Income Taxes

by

If you are the executor of an estate or the trustee of a trust, you should know that egregiously high income tax rates apply to estates and trusts at very low levels of income. In 2017, for estates and trusts, the 39.6% income tax rate as well as the 3.8% Net Investment Income (NII) tax kicks in at $12,500 of income. That’s not very high. And don’t forget, you don’t need $12,500 of investment income to pay the NII tax. If the total income exceeds the $12,500 threshold, the NII tax might be due on all of the investment income. For example, let’s say an estate has income of $212,500. The tax on the $200,000 (income in excess of the $12,500 threshold), at 43.4% equals a tax of $86,800. Ouch!

 

Help! Is there any hope?

Yes, the estate and trust only pays tax on what’s not distributed. Distributions lower the income tax for the trust and at the same time increase the recipient’s personal income tax. However, individuals do not pay the highest rates unless they are wealthy. In our example, if there are four beneficiaries and each receives $50,000 (one-fourth of the $200,000) many individuals will only pay 15% on that $50,000. That’s $7,500 per beneficiary for a total of $30,000 instead of $86,800 for a tax savings of $56,800.

 

Is there anything I can do?

It’s not too late. There’s a rule allowing distributions made in the first 65 days of the next year to be treated as if made in the preceding year. A special election must be made on the Fiduciary Income Tax Return. This year’s deadline is          March 6, 2018. Executors and trustees should act soon to take advantage of this opportunity for substantial tax savings.

 

Please contact us for assistance with making distributions or any other tax related questions about managing a trust or estate.

 

NJ Honors our Veterans with Tax Savings

by

US Veterans

New for Tax Year 2017. You are eligible for a $3,000 exemption on your Income Tax return if you are a military veteran who was honorably discharged or released under honorable circumstances from active duty in the Armed Forces of the United States by the last day of the tax year. Your spouse (or civil union partner) is also eligible for an exemption if he/she is a veteran who was honorably discharged or released under honorable circumstances and you are filing a joint return. This exemption is in addition to any other exemptions you are entitled to claim and is available on both the resident and nonresident returns.

The good

  1. you apply once and are eligible for the exemption for life

 The bad

  1. The application is submitted separately from your e-filed return.
  2. A $3,000 exemption only saves you between $42 and $269 depending on your tax bracket

 The ugly

  1. The submission form must be completed on paper and signed, and then is uploaded, mailed or faxed.

 How do I apply? Complete Veteran Income Tax exemption submission form and submit with a copy of your official discharge document, usually Form DD-214. This can be done before filing your tax return and is recommended for faster processing of your return.

More information is available on the State of New Jersey website.

http://www.state.nj.us/treasury/taxation/military/vetexemption.shtml

 

Changes to 529 Plans -Start Saving for Jr!

by

529 Plans – Does It Make Tax Sense to Contribute?

There have always been huge benefits to saving for higher education using 529 Plans. While the contributions are not deductible,

Jr in First Grade

earnings in a 529 plan grow federal tax-free and will not be taxed when the money is withdrawn to pay for college. The donor stays

in control of the account. The named beneficiary has no legal rights to the funds. You can be assured that the funds will be used for

the intended purpose. This differs from custodial accounts where the child takes control of the assets once he or she reaches legal age. 

Are there any state benefits?

Over 30 states currently offer a full or partial deduction or credit for 529 plan contributions. NJ does not offer any such deduction or credit. However, if you live or work in NY there is a deduction of $5,000 ($10,000 if you’re married filing joint) when you file your NY income taxes.

Are there income limitations?

Unlike Roth IRAs, 529 plans have no income limits, age limits or annual contribution limits. There are lifetime contribution limits per beneficiary depending on the state of approximately $250,000 to $400,000.

One can contribute up to $75,000 in one year per beneficiary and not be subject to a gift tax. Even if the contribution exceeds $75,000, no gift tax is paid until the donor has made lifetime gifts in excess of $10,000,000 (ten million dollars).

What if my child doesn’t use all the funds?

It’s not a “use it or lose it” account. 529 owners can change their beneficiaries at their own discretion and without limitation. For example, if one child doesn’t use all or any of the funds in the 529 plan, the account can be placed in the name of a sibling or other family member.

What’s New in 2018?

The new tax act allows qualified expenses under 529 plans of up to $10,000 per beneficiary per year to be used for elementary and secondary school expenses. These expenses include tuition at religious educational institutions.

And there’s more good news! Amounts from 529 plans may be rolled over to an ABLE account without penalty, provided that the ABLE account is owned by the designated beneficiary of that 529 account, or member of the beneficiary’s family. ABLE (Achieving a Better Life Experience) is a tax-free savings account which meets the needs of individuals with disabilities. An individual’s ABLE account can have up to $100,000 which does not count toward the SSI resource limit.

 Start Saving for Jr. Now!

529 plans were always attractive vehicles to save for higher education. The qualified expenses now expand to elementary and high school tuition. This opens planning opportunities for both low-income families, seeking to receive the earned income credit as well as for high-income families who want to reduce their taxable income.