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New Jersey Use Tax & Credit

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New Jersey Use Tax & Credit


Enter on Line 32 the amount of any contribution you made for conservation purposes of a qualified real property interest in property located in New Jersey.
The amount of the deduction is the amount of the contribution allowed as a deduction in computing your taxable income for Federal income tax purposes. If you are required to file Federal Form 8283 with your Federal Form 1040, enclose a copy.When you purchase taxable items or services to be used in New Jersey but do not pay sales tax, you owe use tax. This commonly occurs when purchases are made on the Internet, by phone or mail order, or outside the State from sellers who do not collect New Jersey sales tax. The New Jersey use tax rate is the same as the sales tax rate: 7%. If you paid sales tax to another state at a rate less than 7% on a purchase that would have been taxed in New Jersey, you owe use tax based on the difference between the two rates. For example, if you paid 6% sales tax to another state, you owe 1% use tax to New Jersey.

No credit is allowed for sales tax paid to a foreign country. You must pay 7% use tax to New Jersey on such purchases. The following are some items that  re often purchased without paying sales tax. Residents would then owe use tax based on the purchase price, including any delivery/shipping charges.

♦ Electronics ♦ Appliances
♦ Furniture ♦ Jewelry
♦ Music ♦ Books
♦ Artwork ♦ Software
♦ Computers ♦ CDs and DVDs
♦ Video games ♦ Carpet
♦ Antiques

For example:

♦ You purchased several DVDs on the Internet for $100 with free shipping and paid no sales tax. Your use tax liability to New Jersey on these items is
$7 ($100  .07 = $7).
♦ You purchased a computer for $1,550 plus $50 for shipping from a seller located outside of New Jersey and paid no sales tax. Your use tax liability
to New Jersey on this item is $112 ($1,600  .07 = $112).

♦ On a trip to Maine you purchased an antique desk for $4,000 and paid Maine sales tax at the rate of 5%. The difference, $80 (2% of the purchase price), is due to New Jersey as use tax.
♦ You sent a watch to a Pennsylvania jeweler to be repaired and the watch was returned to you via UPS. You paid $45 for the repair plus $5 for shipping
and paid no sales tax. Your use tax liability to New Jersey on this service is $3.50 ($50  .07 = $3.50).

There are two ways for individual taxpayers to report and remit use tax:

1. By completing and filing a Use Tax Return (Form ST-18) within 20 days after property is brought into New Jersey,
2. By reporting any use tax due on Line 45 of their resident income tax return, Form NJ-1040. Form ST-18 is provided in this booklet
for your convenience (in the center of the booklet with other tax forms). If you do not owe use tax, enter “0.00” on Line 45. Do not leave this line blank.
You must enter an amount on Line 45. If you owe use tax and are remitting it with Form NJ-1040, use Worksheet G to calculate the amount you owe.

Note: Using the Estimated Use Tax Chart when calculating the amount of use tax to report on Line 45 does not preclude the Division of Taxation from auditing your account. New Jersey does have access to records maintained by out-of-State businesses, and if additional tax is due, you may receive an assessment for the amount of use tax owed, plus applicable penalties and interest. For more information about which items and services are subject to New Jersey sales and use tax, see Tax Topic Bulletin S&U-4, New Jersey Sales Tax Guide. For more information about New Jersey use tax, see publication ANJ-7, Use Tax in New Jersey.

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Article Details
Views: 922 Created on: Jun 15, 2013
Date updated: Aug 26, 2015
Posted in: STATES, New Jersey

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