Qualified Investment Funds Distributions and gains from a New Jersey “qualified investment fund” are excludable from income to the extent that the distributions and gains come from the qualified exempt obligations held by the fund.
To be a “qualified investment fund” the fund must:
Be a regulated investment company;
Have 80% or more of its investments (other than cash or receivables) in obligations that are exempt from New Jersey Income Tax; and
Complete and retain Form IF-1, Certification of Qualified Investment Fund, to document its status. This certification does not need to be filed with the Division but must be made available upon request.
A fund may hold up to 20% of its investments in obligations that are not tax-exempt. The portion of the fund’s distributions and gains that comes from those taxable investments must be reported as dividends and/or capital gains (as indicated on your Form 1099) on your New Jersey Income Tax return (Line 16 and/or Line 2, Schedule B, Form NJ‑1040 or Lines 16 and/or 18, Column A, Form NJ‑1040NR).
A fund that is a qualified investment fund for New Jersey purposes is required to notify its shareholders by February 15 of the portion of their distribution that may be excluded from income. You should contact your broker to determine if yours is a “qualified investment fund” for New Jersey Income Tax purposes.