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Division of Taxation

Important Income Tax Changes for Tax Year 2010

Filing Deadline
The filing deadline is April 18, 2011, for calendar year taxpayers, the same day the Federal Form 1040 is due. The due date is April 18 instead of April 15 because of the Emancipation Day holiday in the District of Columbia.

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.

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.

Property Tax Credit Application (Form NJ-1040-H). Most New Jersey residents claim the property tax deduction or credit on their resident income tax return (Form NJ-1040). However, certain residents who are not required to file a tax return but are eligible for the property tax credit can use the new Property Tax Credit Application (Form NJ-1040-H) instead of Form NJ-1040 to apply for the credit. Filers can use Form NJ-1040-H only if they:

1.  Were 65 years of age or older, blind, or disabled on December 31, 2010, and
2.  Had New Jersey gross income for 2010 of $20,000 or less ($10,000 or less if filing status is single or married/CU partner, filing separate return), and
3.  Have not filed and will not file a 2010 New Jersey resident income tax return, and
4.  Were not a New Jersey homeowner on October 1, 2010.

Note:Residents who owned and occupied their principal residence in New Jersey on October 1, 2010, should not file Form NJ-1040-H even if they meet the requirements in paragraphs 1 – 3. The property tax credit for these homeowners will automatically be included with their homestead benefit, provided they file a homestead benefit application.

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.

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.

Designated Contributions
Two new funds have been added to the list of organizations to which taxpayers can contribute on the New Jersey tax return. To donate to the new funds, taxpayers must specify the “code number” at the “Other Designated Contribution” line. The new funds that have been added for 2010 are: Community Food Pantry Fund (09) and Cat and Dog Spay/Neuter Fund (10).

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.

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.)

Commuter Transportation Benefits
The maximum commuter transportation benefit for 2010 is $2,760.

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.

Homestead Benefit (Rebate) Program
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.

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.

Note:Benefits available under this program are subject to change.

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 the extended due date of November 7, 2011. The original due date was June 1, 2011.

Budgetary constraints limited the PTR benefits paid for 2009 to the previous year’s benefit level for established participants and did not provide reimbursements to first-time applicants. Applicants who filed 2009 applications as first-time filers but who did not receive a check, should submit a 2010 application if they meet the requirements.

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. For residents applying for reimbursements for tax year 2010, total annual income must be:

For 2010: $70,000 or less, and
For 2009: $80,000 or less

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: Benefits available under this program are subject to change.

Last Updated: Tuesday, 11/17/20