Transcript 2009 Volunteer Tax Preparation

2009
Volunteer
Tax Preparation
NJ Division of Taxation
www.njtaxation.org
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
www.njtaxation.org
New for 2009

Earned Income Tax Credit


Increases to 25%
New Tax Rates

Incomes $400,000 and over

Property Tax Deduction

NJ Lottery Winnings
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
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’
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
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
Form NJ-1040
Identifying Information
Page 1
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
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
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
Line 13 – Dependents Info
Social Security Numbers must be listed
Form NJ-1040
Reportable Income
Page 2
Tax-Exempt Income

Social Security

Unemployment Compensation

NJ Lottery Winnings

Military Pensions
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
W-2 Sample
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
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
Line 16 – Dividends

Stocks

Mutual Funds

Insurance Policies

Other income reported on Form
1099-DIV (except capital gains)
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
Reporting
Pension, Annuity,
and IRA Income
Line 19
Retirement Plans
Contributory
Non-Contributory
fully taxable
Contributory Plans

Three components:
 Employee contributions
 Employer contributions
 Earnings
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
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
IRA Withdrawals

Lump-sum

Periodic payments

Use Worksheet C, Page 24
IRAs

Consist of:
 Contributions (non-taxable)
 Earnings (taxable)
 Rollovers
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
Gambling Winnings (Line 23)
Substantiated Gambling losses
may be deducted from
winnings prior to
reporting on Line 23
Certain NJ Lottery Winnings must also be included on Line 23
New for ‘09 - NJ Lottery Winnings

Prizes Exceeding $10,000



Taxable
Subject to 3% Withholdings
$10,000 or below

Remain Non-Taxable
Record Keeping - Losses
Substantiated through:





Daily log
Journal
Canceled check
Losing race track pari-mutuel tickets
Letters from casino which rate
gambling activity
Alimony Received (Line 24)


Use to report Alimony and Separate
maintenance payments received
Child Support is not reported
anywhere on Form NJ-1040
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
Pension Exclusion (Line 27a)

Eligibility:

Age 62 or older; or

Disabled as defined by Social Security;

Gross income of $100,000 or less
Pension Exclusion Amounts
Retirement Exclusion (Line 27b)
Taxpayer may deduct unused Pension
Exclusion from Line 27a if:
Line 14 ___
Line 17 ___
Line 20 ___
Line 21 ___
Total less than $3,000
Gross Income – Who Must File?

$10,000 or less



Single
Married/CU - Filing Separate
$20,000 or less



Married/CU Filing Joint
Head of Household
Qualifying widower
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
Medical Expenses (Line 30)


For medical expenses not
reimbursed by insurance
Expenses in excess of 2% of line 28
Gross Income reported
Other Available Deductions

Line 31 – Alimony/Separate
maintenance paid (court ordered)

Line 32 – Qualified Conservation
Contribution

Line 33 – Health Enterprise Zone
Deduction
Property Tax Deduction/Credit


Enter total property taxes paid (or
18% rent) on line 36a
Residency Status – Line 36b
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
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
Tax (Line 38)

Show NJ Tax amount based on
taxable income

Tax Tables (Pg 57)

Tax Rates (Pg 66)
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
Form NJ-1040
Calculating Tax and Payments
Page 3
Line 41 – Line 44



Line 41 - Balance of Tax
Line 42 – Sheltered Workshop Tax
Credit
Line 44 – Use Tax Due

See page 39
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
Total Tax (Line 46)
Shows combined:

Tax (line 43);

Use Tax (line 44); and

Estimated Tax Penalty (line 45)
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’
W-2 Sample
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
Excess UI/DI (Lines 51-52)

For people with:




Multiple employers
Multiple W-2s
With excess UI/DI contributions
Must complete and include Form NJ2450 with NJ-1040
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
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
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
Property Tax Relief Programs

Homestead Rebate


Available to Homeowners and Renters
Property Tax Reimbursement

Available only to Homeowners
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
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
Property Tax Reimbursement
Income Eligibility Limits

2008


Single/Married $70,000
2009

Single/Married $80,000
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
PTR - Application

Form PTR-1


Form PTR-2


Used for 1st time applicants
2nd and later years
Proof of Property Taxes must be
included