2009 Volunteer Tax Preparation NJ Division of Taxation .
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Transcript of 2009 Volunteer Tax Preparation NJ Division of Taxation .
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2009 Volunteer Tax Preparation
NJ Division of Taxationwww.njtaxation.org
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Important Contact Information
Regional Taxpayer Service Offices
Customer Service Center 609/292-6400
Division of Revenue E-File Unit 609/633-1132
www.njtaxation.org
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www.njtaxation.org
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New for 2009
Earned Income Tax Credit Increases to 25%
New Tax Rates Incomes $400,000 and over
Property Tax Deduction
NJ Lottery Winnings
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Important Processing Information
Do not use mailing label if it is incorrect
Do not staple, clip or otherwise attach pages together
Place only 1 return for each envelope
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Important Processing Information
You may not report a loss on Form NJ-1040
Use only blue or black ink
Do not use dollar signs or dashes
Leave unused lines ‘Blank’
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NJFastFile Options
NJElf Prepare NJ tax returns by using
commercially available software
NJWebFile Taxpayers can prepare their returns on
the Division’s secure Internet site.
www.njtaxation.org
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Benefits of E-Filing
Minimizes processing errors
Faster Refunds Can be directly deposited
Allows file now . . . pay later Payments can be made electronically or
via mail
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Form NJ-1040
Identifying InformationPage 1
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Filing Status (Lines 1 – 5)
Same filing status used as for Federal purposes
Exception: Civil Union Couples
File NJ income tax as Married IRS does not recognize CU’s
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Personal Exemptions (Lines 6 - 8)
Line 6 applies to taxpayer, spouse/CU, domestic partner
Line 7 for those Age 65 or Older
Line 8 for those Blind or Disabled
Domestic Partner, Age or disability exemptions must be documented
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Dependents (Lines 9 – 11)
Line 9 – Dependent children; must be the same as Federal return
Line 10 – Other dependents; must be the same as Federal return
Line 11 – Enter dependents attending college
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Line 13 – Dependents Info
Social Security Numbers must be listed
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Form NJ-1040
Reportable IncomePage 2
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Tax-Exempt Income
Social Security
Unemployment Compensation
NJ Lottery Winnings
Military Pensions
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Wages (Line 14)
Use W-2 Box 16, ‘State Wages’
State wages often differ from Federal wages (Box 1)
All W-2s received must be included with the NJ-1040
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W-2 Sample
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Line 15a – Taxable Interest
Banks, S&Ls
Credit Unions, Savings Accounts
Checking Accounts
Bonds, Notes, Certificates of Deposit
Ginnie Maes, Fannie Maes, Freddie Macs
Must enclose copy of Fed Schedule B if line 15a is over $1,500
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Tax-Exempt Interest – Line 15b
Obligations of the State of New Jersey and/or any of its political subdivisions
Direct Federal Obligations
Pub GIT-5, Exempt Obligations
Must enclose an itemized schedule if line 15b is over $10,000
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Line 16 – Dividends
Stocks
Mutual Funds
Insurance Policies
Other income reported on Form 1099-DIV (except capital gains)
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Capital Gains (Line 18)
All income received from the disposition of property
Includes real estate, stocks, etc
Reported on NJ Schedule B
NJ Follows Federal Adjustments with Capital Gains
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ReportingPension, Annuity, and IRA Income
Line 19
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Retirement Plans
Contributory Non-Contributory
fully taxable
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Contributory Plans
Three components:Employee contributionsEmployer contributionsEarnings
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Three-Year Rule
If employee contributions recovered within three years of date of first pension payment
Pension income is not reported until contributions are recovered
IRS no longer allows three year rule
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General Rule
Percentage is used based on proportionate share of Contributions to Total Value of the Pension
This is applied each year to the Pension amount received
Use Worksheet A, pg 22, to determine which pension method to use
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IRA Withdrawals
Lump-sum
Periodic payments
Use Worksheet C, Page 24
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IRAs
Consist of:Contributions (non-taxable)Earnings (taxable)Rollovers
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Taxable Pension (Line 19)
Line 19 is for the total of:
Taxable Pensions (after reduction by Three-year or General Rule)
Taxable Annuities
Taxable IRAs
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Gambling Winnings (Line 23)
Substantiated Gambling losses may be deducted from
winnings prior toreporting on Line 23
Certain NJ Lottery Winnings must also be included on Line 23
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New for ‘09 - NJ Lottery Winnings
Prizes Exceeding $10,000 Taxable Subject to 3% Withholdings
$10,000 or below Remain Non-Taxable
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Record Keeping - Losses
Substantiated through: Daily log Journal Canceled check Losing race track pari-mutuel tickets Letters from casino which rate
gambling activity
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Alimony Received (Line 24)
Use to report Alimony and Separate maintenance payments received
Child Support is not reported anywhere on Form NJ-1040
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Other Income (Line 25)
Prizes and Awards Income in Respect of a Decedent Income from Estates and Trusts Scholarships/Fellowships Jury duty pay Poll worker pay
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Pension Exclusion (Line 27a)
Eligibility: Age 62 or older; or
Disabled as defined by Social Security;
Gross income of $100,000 or less
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Pension Exclusion Amounts
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Retirement Exclusion (Line 27b)
Taxpayer may deduct unused PensionExclusion from Line 27a if:
Line 14 ___Line 17 ___Line 20 ___Line 21 ___
Total less than $3,000
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Gross Income – Who Must File?
$10,000 or lessSingleMarried/CU - Filing Separate
$20,000 or lessMarried/CU Filing JointHead of HouseholdQualifying widower
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Exemptions (Line 29)
Use totals from Lines 12a & 12b
Line 12a Total __ x $1000 = ____Line 12b Total __ x $1500 = ____ Total Exemption Amount = ____
See instructions on page 29
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Medical Expenses (Line 30)
For medical expenses not reimbursed by insurance
Expenses in excess of 2% of line 28 Gross Income reported
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Other Available Deductions
Line 31 – Alimony/Separate maintenance paid (court ordered)
Line 32 – Qualified Conservation Contribution
Line 33 – Health Enterprise Zone Deduction
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Property Tax Deduction/Credit
Enter total property taxes paid (or 18% rent) on line 36a
Residency Status – Line 36b
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Property Tax Deduction/Credit
Use Schedule 1 to determine which is the greater benefit
Enter Property Taxes Paid on Line 36c or a flat $50 credit on Line 48
New: Deduction cannot be taken if Gross Income exceeds $250,000
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Property Tax Deduction/Credit
Suspended for $250,000/ovr Unless 65/ovr or Disabled
$5,000 Cap Gross Incomes over $150,000 Unless 65/ovr or Disabled
Renters are not subject to above restrictions
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Tax (Line 38)
Show NJ Tax amount based on taxable income
Tax Tables (Pg 57)
Tax Rates (Pg 66)
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Credit for Taxes Paid (Line 40)
Used for NJ Residents who have income subject to tax out of the state
Schedule A must be completed
Note: Income must be reported on the NJ-1040
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Form NJ-1040
Calculating Tax and PaymentsPage 3
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Line 41 – Line 44
Line 41 - Balance of Tax
Line 42 – Sheltered Workshop Tax Credit
Line 44 – Use Tax Due See page 39
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Use Tax
Items purchased out of state, for use in New Jersey
are subject to a Use Tax
Enter 0.00 if no Use Tax is due
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Total Tax (Line 46)
Shows combined: Tax (line 43); Use Tax (line 44); and
Estimated Tax Penalty (line 45)
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NJ Income Tax Withheld (Line 47)
Form W-2, Box 17 (State Income Tax Withheld)
Form 1099-R (Pensions, etc)
Include amounts from all W-2s & 1099s received
Note: Be sure W-2, Box 15 Shows ‘NJ’
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W-2 Sample
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Earned Income Tax Credit (Line 50)
Expanded for Tax Year 2007 & after All NJ Residents who qualify for Federal
EITC are now eligible
25% of Federal EIC amount
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Excess UI/DI (Lines 51-52)
For people with: Multiple employers Multiple W-2s With excess UI/DI contributions
Must complete and include Form NJ-2450 with NJ-1040
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Total Payments/Credits (Line 53)
Include: Total NJ Income Tax Withheld Property Tax Credit (if applicable) Estimated Tax Payments NJEIC Excess UI/HC/WD Excess DI
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Underpaid or Overpaid
Compare Total Payments (Line 53) to Total Tax (Line 46)
If Line 53 is greater than line 46, the difference is an overpayment
If Line 53 is less than line 46, the difference is due to the state
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Refund Amount (Line 64)
Overpayments can be: Left as a credit for next year;
Donated (all or in part) to various charitable designations; or
Refunded to the Taxpayer
Be sure to include requested refund amount on Line 64
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Property Tax Relief Programs
Homestead Rebate Available to Homeowners and Renters
Property Tax Reimbursement Available only to Homeowners
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Homestead Rebate
Tenants use Form TR-1040 Page 4 of the NJ-1040
Homeowners Applications are mailed after April 15th
File by Phone or Online
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PTR - Eligibility
Must be Age 65/ovr or Disabled by 12/31/2008
NJ Resident for at least 10yrs
Owned and lived in the home for at least 3 years
Have fully paid property taxes due
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Property Tax Reimbursement
Income Eligibility Limits 2008
Single/Married $70,000
2009 Single/Married $80,000
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PTR – Income Limits
Virtually all gross income is included for PTR eligibility Social Security Unemployment Military Pension NJ Lottery Winnings
This will often vary from the income tax form
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PTR - Application
Form PTR-1 Used for 1st time applicants
Form PTR-2 2nd and later years
Proof of Property Taxes must be included
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