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NJ Income Taxes

NJ Tax Amnesty: Cool Savings Despite Sizzling Summer Heat

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 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!

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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.

NJ Honors our Veterans with Tax Savings

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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

 

Delay of NJ 2016 refunds

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The New Jersey Division of Taxation will not begin issuing 2016 tax refunds until March 1, 2017.

Due to enhanced efforts to protect NJ taxpayers from identity theft and refund fraud, early filers could experience delays in receiving their 2016 refunds.  Tax returns filed electronically may now take a minimum of 4 weeks to validate and process.  Paper filed tax returns may take a minimum of 12 weeks to validate and process. 

To check the status of your refund click here:  Online Refund Service or call 1-800-323-4400.

Hit by the NJ Exit Tax on Sale of Real Estate? You Can Recoup Your Money

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The New Jersey “Exit Tax”, which became law in 2007, requires the real estate seller to file a GIT/REP form

Exiting NJ?

(Gross Income Tax form) in order to record a Deed for  the transfer of his property.

When a non-resident sells property, New Jersey will withhold this income tax in the amount of either 8.97 percent of the profit or 2 percent of the total selling price, whichever is higher. Therefore, even if the property is sold at a loss, tax must be withheld to fulfill the two percent requirement.

What Can I do?

It’s important to realize that while the Exit Tax requires a substantial withholding, it doesn’t have any impact on the actual tax liability. If the seller files a NJ tax return he is refunded the difference between what was withheld and what is owed. This recovery can be very significant when one factors in the selling costs and original purchase price, both of which reduce the taxable gain.

Estates Should Pay Special Attention

The recovery is often even greater in the case of real estate sold by an estate, as there is a step up in cost basis which would typically minimize a gain on the sale, often resulting in full recovery of the entire withholding. To quickly expedite the recovery of the excess withholding, it would be prudent to timely file Form NJ1040 NR (individual) or NJ1041 (estate/fiduciary).

How do I know if I am considered a “non-resident”?

So who’s considered a “resident” and who’s a “non-resident” with regard to this tax? The law defines a resident taxpayer as one of the following:

  • An individual who is and intends to continue to maintain a permanent place of abode (home, residence) in New Jersey on/after the day of transfer
  • An estate established under the laws of New Jersey
  • A trust established under the laws of New Jersey

A nonresident is simply defined as “any taxpayer that does not meet the definition of resident taxpayer.”

Resolve Your NJ Tax Debt, No Penalties!

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Businesses and individuals facing unpaid New Jersey tax liabilities may be able to get a break on penalties—although not on interest—according to a recent NJ Division of Taxation announcement. But you have to act quickly. From now until November 17, businesses and individuals with liabilities from tax periods 2005 through 2013 may be able to enter into a “closing agreement” with the Division.

And why should I do this now? Because under this limited-time offer (remember, the clock runs out on November 17) the Division of Taxation will accept—in full and final satisfaction of the outstanding tax liability—an amount that reflects reduced or eliminated penalties, with no charge for collection or recovery fees. Better yet, the tax liability will not be subject to further audit.

Not so good: no refund can be claimed by the taxpayer on this matter. You win some, you lose some.

Here are some more details

• Most penalties can be reduced to zero. But an Amnesty Penalty on taxes due on or after 1/1/2002 and before 2/1/2009 will still apply.

• Interest will not be waived, but it will only be calculated on the tax and reduced penalties (and the penalties may drop to zero, anyway).

• Recovery Fees—a 10% fee on each tax liability that was previously forwarded to the Division’s authorized collection agency—may be waived.

• Also, costs of collection may be eliminated. Normally, if the Division has to collect a tax debt by filing a Certificate of Debt (judgment,) a 10% fee is applied to cover legal and collection costs.

Is there a hitch? Sort of. If you don’t pay the balance due by November 17, 2014 or provide sufficient proof that you or your businesses do not owe it, then any and all penalties, interest, costs of collection, and/or recovery fees will remain due. The state may also pursue further collection activity. You may pay the balance due in one lump sum or you may make several payments to satisfy the amount due. But the full amount must be paid by November 17, 2014 in order to take advantage of the reduced penalties, and eliminated costs of collection, and recovery fees.

For assistance please contact our Tax Manager, Steven Citron. You may also visit the NJ Division of Taxation website for more information at Resolve Your Tax Debt – Fall 2014

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