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New Jersey Excludable Income

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New Jersey Excludable Income

Answer
Pension Exclusion
You qualify for the New Jersey pension exclusion if:
 - You (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older or disabled as defined by Social Security guidelines on the last day of the tax year; and
 - Total income for the entire year was $100,000 or less.
If you qualify for the pension exclusion, you may exclude all or a part of the income you received during the year from taxable pensions, annuities, and IRA withdrawals. You may exclude up to $20,000 (filing status married/CU couple, filing joint return), $15,000 (filing status single, head of household, or qualifying widow(er)/surviving CU partner), or $10,000 (filing status married/CU partner, filing separate return).
Other Retirement Income Exclusion
If you (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older on the last day of the tax year, you may qualify to exclude other income. There are two parts to the total exclusion: Part I, the unclaimed portion of your pension exclusion, and Part II, a special exclusion for taxpayers who are unable to receive Social Security or Railroad Retirement benefits. Each part has different eligibility requirements.
I. Unclaimed Pension Exclusion -  You are eligible to use the unclaimed portion of your pension exclusion if:
 - You (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older on the last day of the tax year; and
 - Total income for the entire year was $100,000 or less; and
 - Income from wages, net profits from business, distributive share of partnership income, and net pro rata share of S corporation income totaled $3,000 or less; and
 - You did not use the maximum pension exclusion (your taxable pension, annuity, or IRA withdrawal was less than the exclusion amount for your filing status or you did not receive pension, annuity, or IRA withdrawal income).
II. Special Exclusion for Taxpayers Unable to Receive Social Security or Railroad Retirement Benefits. This benefit is not related to the pension exclusion and, if you qualify, you may claim it whether or not you use the maximum pension exclusion. You qualify for this additional exclusion if:
 - You (and/or your spouse/civil union partner if filing jointly) were 62 years of age or older on the last day of the tax year; and
 - You (and your spouse/civil union partner if filing jointly) are unable to receive Social Security or Railroad Retirement benefits, but would have been eligible for benefits had you fully participated in either program.
Note: When you and your spouse/civil union partner file a joint return and only one of you is 62 years of age or older, you may claim the full exclusion. However, only the income of the spouse/civil union partner who is age 62 or older may be excluded.
Sale of a Principal Residence. If you sell your principal residence, you may qualify to exclude up to $250,000 ($500,000 for certain married/civil union couples filing a joint return) of any gain from your income. Capital gain is computed in the same manner as for Federal income tax purposes. Any amount that is taxable for Federal purposes is taxable for New Jersey purposes.
You can claim the exclusion if, during the 5-year period ending on the date of the sale, you have:
1. Owned the home for at least 2 years (the ownership test); and
2. Lived in the home as your principal residence for at least 2 years (the use test).
You can exclude up to $250,000 ($500,000 for certain married/civil union couples filing a joint return) of gain from the sale of your principal residence if both 1 and 2 below apply.
1. Neither you nor your spouse/civil union partner if filing a joint return is excluding gain from the sale of another home.
2. You or your spouse/civil union partner if filing a joint return owned and lived in the home for periods

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Views: 3750 Created on: Jun 15, 2013
Date updated: Nov 29, 2017
Posted in: States, New Jersey

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