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Division of Taxation

Important Income Tax Changes for Tax Year 2012

Alternative Business Calculation Adjustment
Beginning with tax year 2012, taxpayers who have losses in certain business-related categories of income can utilize those losses to calculate an adjustment to their taxable income (“Alternative Business Calculation Adjustment”). In addition, taxpayers can carry forward unused losses in those categories for a period of 20 years to calculate future adjustments. This change applies to residents, nonresidents, and estates and trusts.

Income/losses in the following four categories are included in the calculation of the adjustment: net profits from business; net gains or net income from rents, royalties, patents, and copyrights; distributive share of partnership income; and net pro rata share of S corporation income. Taxpayers with income and/or losses in any of these categories must complete two new return schedules: Schedule NJ-BUS-1, Business Income Summary Schedule, and Schedule NJ-BUS-2, Alternative Business Calculation Adjustment, to calculate the amount of their adjustment or loss carryforward. The percentage used to calculate the adjustment is being phased in over five years. The percentage will increase from 10 percent for tax year 2012 to 50 percent for tax year 2016 and after.

Note: The Alternative Business Calculation Adjustment does not change the way income is reported on the New Jersey income tax return. A net loss in any category of income cannot be reported as such on Form NJ-1040, Form NJ-1040NR, or Form NJ-1041. When reporting income on the return, a net loss in one category of income cannot be applied against income or gains in another, and no carryback or carryforward of losses is allowed.

Use Tax
A new worksheet has been developed (Worksheet G, Use Tax Calculation) to make it easier for New Jersey residents to determine the amount to report on Line 45, Use Tax Due on Internet, Mail-Order, or Other Out-of-State Purchases.

Deceased Taxpayers
A new oval has been added below the signature line that must be filled in if a copy of a deceased taxpayer’s death certificate is enclosed with the return. This oval should be filled in and a copy of the death certificate enclosed only if there is a refund due and the check needs to be issued to the decedent’s surviving spouse/civil union partner or estate.

Designated Contribution
Four 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 2012 are: Boys and Girls Clubs in New Jersey Fund (12), NJ National Guard State Family Readiness Council Fund (13), American Red Cross-NJ Fund (14), and 2014 NJ Special Olympics Home Team Fund (15).

Credit for Excess UI/WF/SWF; DI; FLI Withheld
For 2012, the maximum employee unemployment insurance/workforce development partnership fund/supplemental workforce fund contribution was $128.78, the maximum employee disability insurance contribution was $60.60, and the maximum employee family leave insurance contribution was $24.24. Taxpayers with two or more employers who have contributed more than the maximum amount(s), must complete Form NJ-2450 to claim credit on their New Jersey tax return for the excess withheld.

Credit for Taxes Paid to Other Jurisdictions
The Philadelphia nonresident wage tax rate for 2012 is 3.4985% (.034985).

Roth IRA Conversions During Tax Year 2010
Taxpayers who converted an existing IRA to a rollover Roth IRA during tax year 2010 and made a Federal election to report the income in equal installments in 2011 and 2012 must report one-half of the amount that is taxable for New Jersey purposes on their income tax return for 2012.

Homestead Benefit Program
Homeowners. New Jersey residents who owned and occupied a home in New Jersey that was their principal residence on October 1, 2012, may be eligible for a homestead benefit provided the 2012 property taxes were paid and they meet certain income limits. The homestead benefit application for homeowners is not included in the NJ-1040 booklet. Information about the 2012 homestead benefit will be posted on the Division’s Web site as it becomes available.

There is no tenant rebate application available for 2012 since tenant rebates for 2009 through 2011 were suspended by the State Budget.

Note: Eligibility requirements, including income limits, and 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 2012 Property Tax Reimbursement Application (Form PTR-1 or PTR-2) by the extended due date of September 16, 2013. The original due date was June 3, 2013.

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. The 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.

benefits available under this program are subject to change.

Last Updated: Tuesday, 11/17/20