Note: Federal legislation signed into law on November 11, 2009, will affect the New Jersey rules regarding the residency and tax treatment of income of certain spouses of military personnel. Additional information will be posted when it becomes available.
Tax Rates Increased on Income Over $400,000
The New Jersey gross income tax rates for tax year 2009 increased to: 8% on income over $400,000 but not over $500,000; 10.25% on income over $500,000 but not over $1,000,000; and 10.75% for income over $1,000,000. This is a one-year increase. Tax rates are expected to revert to 2008 rates on January 1, 2010. Go to Tax Rates to view the New Jersey tax tables, tax rates schedules, or NJ-WT, Instruction Booklet for Employers, Payors of Pension and Annuity Income and Payors of Gambling Winnings.
Property Tax Deduction/Credit
— Deduction Limitations. For tax year 2009, homeowners under 65 years of age and not blind or disabled whose New Jersey gross income is more than $250,000 are not eligible for the property tax deduction. In addition, for homeowners under 65 years of age and not blind or disabled whose New Jersey gross income is over $150,000 but not over $250,000, the maximum deduction is limited to $5,000. Homeowners who are not eligible for a deduction because their income is over $250,000 can receive a property tax credit if they satisfy the other eligibility requirements.
— Schedule 1 Completion.
Two new charts have been added to the tax return instructions to help taxpayers complete Schedule 1. Homeowners will use Chart A - Determining the Property Tax Deduction for Homeowners, and tenants will use Chart B - Determining the Property Tax Deduction for Tenants, to calculate the deduction for Line 2 of Schedule 1.
Taxpayers must indicate at Line 36b, Form NJ-1040, if they were a homeowner, tenant, or both homeowner and tenant during the year.
Separate Returns, Same Residence.
Spouses/CU partners who file separate tax returns using the filing status “Married/CU Partner, filing separate return” must fill in the oval at Line 37, Form NJ-1040, if they both occupy the same principal residence.
New Jersey Lottery Prizes Over $10,000 Taxable
Beginning January 1, 2009, New Jersey Lottery winnings from prize amounts exceeding $10,000 are taxable for New Jersey gross income tax purposes. The individual prize amount, not the total amount of New Jersey Lottery winnings over the year, determines taxability. Taxpayers may deduct gambling losses from their winnings that occurred during the same year. In addition, New Jersey Lottery losses can be used to offset other gambling winnings. For additional information see New Jersey Lottery Questions and Answers.
Earned Income Tax Credit
For tax year 2009 and thereafter, the amount of the NJEITC will be equal to 25% of the applicant’s Federal earned income tax credit.
Commuter Transportation Benefits
The maximum commuter transportation benefit for 2009 is to $2,540.
Credit for Taxes Paid to Other Jurisdictions
The Philadelphia nonresident wage tax rate for 2009 is .035 from January 1 to June 30, 2009, and .034997 from July 1 to December 31, 2009.
Family Leave Insurance
Beginning January 1, 2009, employers are required to withhold contributions for family leave insurance. The maximum contribution for 2009 was $26.01. Excess family leave insurance contributions cannot be claimed as a credit on the 2009 Form NJ-1040. Taxpayers who contributed more than the maximum amount must file a refund claim with the New Jersey Department of Labor and Workforce Development using their Form UC-9A, Employee’s Claim for Refund of Excess Contributions. For more information write to: Division of Employer Accounts, Worker Refund Unit “2009,” PO Box 910, Trenton NJ 08625-0910, or call the Department of Labor and Workforce Development at 609-633-6400.
Homestead Rebate Program
— Tenants. Under the terms of the State Budget for FY 2011, tenants will not receive a 2009 rebate.
— Homeowners. Applications for the 2009 homeowner rebate will be mailed to eligible homeowners in the fall. Instead of receiving a check, eligible homeowners will receive their homestead benefit for 2009 as a credit on the property tax bill for the second quarter of 2011.
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 2009 Property Tax Reimbursement Application (Form PTR-1 or PTR-2) by the extended due date of November 1, 2010. The original due date was June 1, 2010.
Income Limits. With very few exceptions, all income received during the year, including income which is not required to be reported on Form NJ-1040, must be taken into account to determine eligibility for the property tax reimbursement. Under the terms of the State Budget, residents applying for reimbursements for tax year 2009 must have total annual income for both 2008 and 2009 that is $70,000 or less. (The original income limit for 2009 was $80,000.)These limits apply regardless of marital/civil union status. However, if an applicant’s status is married/CU couple, combined income of both spouses/CU partners must be reported.
Note: The State Budget for FY 2011 limits 2009 reimbursement payments to those applicants who received reimbursements for 2008 and also limits 2009 benefit amounts to the 2008 level.