What are the most important 2010 changes to the New Jersey Individual Income Tax Returns?
Per the New Jersey Division of Taxation, the following are some of the more important tax law changes in 2010 for the individual income tax returns as shown below.
1. Form 1099-G
The State of New Jersey is no longer mailing Form 1099-G, Certain Government Payments, to report the amount of a State tax refund a taxpayer received. State income tax refunds may be taxable income for Federal purposes for individuals who itemized their deductions on their Federal tax return in the previous year. Taxpayers who need this information to complete their Federal return can view or print their 1099-G information online.
2. Property Tax Deduction/Credit
Temporary Deduction Limitations Expire. For 2010, eligibility for the property tax deduction is not limited by income. Residents who meet the requirements may be able to deduct up to 100% of property taxes due and paid or up to $10,000, whichever is less. (For tenants, 18% of rent paid is considered property taxes.) The temporary income eligibility and benefit amount limitations for the property tax deduction were for tax year 2009 only.
3. Earned Income Tax Credit
Residents who are eligible and file for a Federal earned income credit can also receive a New Jersey earned income tax credit. For tax year 2010 and thereafter, the amount of the NJEITC is equal to 20% of the Federal benefit. Complete Worksheet G to determine the eligible amount for 2010.
4. Family Leave Insurance
Beginning with tax year 2010, excess family leave insurance contributions can be claimed as a credit on Form NJ-1040. The maximum contribution for 2010 was $35.64. Taxpayers who had more than the maximum amount withheld by two or more employers must enclose a completed Form NJ-2450 with their return to claim the credit.
5. Roth IRAs
Taxpayers who converted a traditional IRA to a Roth IRA during 2010 and made a Federal election to report the income resulting from the conversion in equal amounts in 2011 and 2012, must report the amount that is taxable for New Jersey in equal installments in 2011 and 2012. If a taxpayer elected to include the entire amount of income from the conversion on the 2010 Federal return, the entire amount that is taxable for New Jersey purposes must be reported on the 2010 New Jersey return.
6. Tax Rates Revert to 2008 Levels
The New Jersey gross income tax rates for 2010 have reverted to the rates that were in effect for 2008. (Rates were temporarily increased for 2009 on income over $400,000.)
7. Commuter Transportation Benefits
The maximum commuter transportation benefit for 2010 is $2,760.
8. Credit for Taxes Paid to Other Jurisdictions
The Philadelphia nonresident wage tax rate for 2010 is .034997 from January 1 to June 30, 2010, and .034985 from July 1 to December 31, 2010.
9. Homestead Benefit for Tenants.
The new Form NJ-1040-H, Property Tax Credit Application, is not a tenant rebate application. Tenant rebates were suspended for 2009. As a result, no 2010 tenant rebate application is enclosed in the NJ-1040 packet.
10. Homestead Benefit for Homeowners.
New Jersey residents who owned and occupied a home in New Jersey that was their principal residence on October 1, 2010, may be eligible for a homestead benefit provided the 2010 property taxes were paid and certain income limits are met. The homestead benefit application for homeowners is not included in the NJ-1040 booklet. Information about the 2010 homestead benefit will be posted as it becomes available.
11. Property Tax Reimbursement
The Property Tax Reimbursement (PTR) Program reimburses eligible senior citizens or disabled persons for property tax increases. Eligible residents must file a 2010 Property Tax Reimbursement Application (Form PTR-1 or PTR-2) by June 1, 2011. The 2010 PTR applications are expected to be mailed in mid to late February.