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2011 Volunteer Tax Preparation

2011 Volunteer Tax Preparation. NJ Division of Taxation www.njtaxation.org. Important Contact Information. Regional Information Centers Customer Service Center 609/292-6400 Division of Revenue E-File Unit 609/633-1132 Training & Outreach Outreach.tax@treas.state.nj.us.

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2011 Volunteer Tax Preparation

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  1. 2011Volunteer Tax Preparation NJ Division of Taxation www.njtaxation.org

  2. Important Contact Information Regional Information Centers Customer Service Center 609/292-6400 Division of Revenue E-File Unit 609/633-1132 Training & Outreach Outreach.tax@treas.state.nj.us www.njtaxation.org

  3. New for 2011 Emancipation Day!!! Returns due April 17th, 2012 Charitable Contributions One new charity New Jersey Lung Cancer Research Fund

  4. Reminders Roth IRA Conversions done in 2010 2011/2012 Tax Reporting Form NJ-1040-H Property Tax Credit No Tenant Rebate Application Suspended by the State Budget Form 1099-G no longer mailed

  5. Important Processing Information Do not staple, clip or otherwise attach pages together Place only 1 return for each envelope You may not report a loss on Form NJ-1040 Leave unused lines ‘Blank’

  6. Form NJ-1040 Identifying Information Page 1

  7. Civil Union / Domestic Partner Civil Union Couples – Filing Status “Married” under NJ Law IRS does not recognize CU’s Domestic Partner – Exemption Not Married Line 6 Exemption may apply If partner does not file NJ-1040

  8. Line 11: Dependents Attending College Must be a dependent Line 9 or 10 Full-time College Student Defined by Institution Under age 22 For Entire Tax Year

  9. Form NJ-1040 Reportable Income Page 2

  10. Tax-Exempt Income Social Security Unemployment Compensation Debt Cancellation – Form 1099-C Military Pensions Refer to page 21

  11. 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

  12. W-2 Sample

  13. 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 Refer to page 23 Must enclose an itemized schedule if line 15b is over $10,000

  14. Net Profits from Business (Line 17) Federal Schedule C Use Federal Expenses and Deduction 100% Meal/Entertainment Deduction Line 17 ‘Blank’ if Net Loss See page 23, NJ Instruction Booklet

  15. Reporting Pension, Annuity, and IRA Income Line 19

  16. Retirement Plans Contributory Non-Contributory fully taxable

  17. Three-Year Rule / General Rule NJ accounting methods No ‘Simplified’ Method Client needs Contribution Records Often varies from Federal Treatment

  18. Three-Year Rule If employee contributions recovered within 36 months of date of first pension payment Pension income is not reported until contributions are recovered IRS no longer allows three year rule

  19. 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 24, to determine which pension method to use

  20. 2010 Conversions to Roth • NJ Following the IRS • Deferred until 2011-2012 • NJ/Fed reporting must be the same

  21. IRA Withdrawals Use Worksheet C, Page 26 Client Record Keeping IRA Contributions Prior Year Worksheet C Roth Distributions Exempt if ‘Qualified’ – page 27

  22. 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

  23. Gambling Winnings (Line 23) Include Casino and Track Betting Include NJ Lottery Winnings Only with prizes exceeding $10,000 Substantiated Losses Can be used to Net total winnings

  24. Record Keeping - Losses Substantiated through: Daily log Journal Canceled check Losing race track pari-mutuel tickets Losing Lottery Tickets

  25. Pension Exclusion (Line 27a) Eligibility: Age 62/older or Disabled Total income of $100,000 or less Amounts Based on Filing Status $20,000 – MFJ/HOH/Widow $15,000 – Single $10,000 - MFS

  26. 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 Earned Income

  27. Gross Income (Line 28) No Filing Required if: $10,000 or less Single Married/CU - Filing Separate $20,000 or less Married/CU Filing Joint Head of Household Qualifying widower

  28. Medical Expenses (Line 30) Unreimbursed medical expenses Include MSA Contributions (Archer) Expenses in excess of 2% of line 28 Gross Income Worksheet E, Page 31

  29. Property Tax Deduction/Credit Enter total property taxes paid (or 18% rent) on line 36a Include Homestead Benefit received as a credit PTR applicants – use base year amount Residency Status – Line 36b Homeowner/Tenant

  30. Property Tax Deduction/Credit Worksheet F determines the greater benefit Deduction Limited to $10,000 $5,000 MFS Enter Property Taxes Paid on Line 36cor a flat $50 credit on Line 48

  31. Tax (Line 38) Show NJ Tax amount based on taxable income Tax Tables (Pg 53) Tax Rates (Pg 62)

  32. Form NJ-1040 Calculating Tax and Payments Page 3

  33. 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

  34. Use Tax (Line 44) Purchases out of state No NJ Sales Tax Estimated Use Tax Chart (pg 39) Absent of Purchase Records Enter 0.00 if no Use Tax is due

  35. 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’

  36. Earned Income Tax Credit (Line 50) Eligibility All NJ Residents who qualify for Federal EITC are eligible to apply – subject to review Calculated Amount 20% of Federal EIC amount

  37. Excess UI/DI/FLI (Lines 51 - 53) For people with: Multiple employers Multiple W-2s With excess UI/DI/FLI contributions Must complete and include Form NJ-2450 with NJ-1040

  38. Underpaid or Overpaid Compare Total Payments (Line 54) to Total Tax (Line 46) If Line 54 is greater than line 46, the difference is an overpayment If Line 54 is less than line 46, the difference is due to the state

  39. Refund Amount (Line 65) 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 65

  40. Part-Year Residents Resident only Part of the Tax Year Complete ‘Residency Status’ Page 1, Form NJ-1040 Allocate Income Just NJ Residency Period Pro-Rate Exemptions and Deductions by Number of Months in NJ

  41. Property Tax Relief Programs Form NJ-1040-H Certain filers only Homestead Benefit Only Homeowners Property Tax Reimbursement Homeowners/Mobile Home Owners

  42. Form NJ-1040-H Property Tax Credit ($50) Age 65/Ovr or Disabled No NJ Income Tax Return Filed Under Filing Threshold Did not own Residence on 10/1/11

  43. Homestead Benefit Owned/Occupied Residence On 10/1/11 Gross Income Under – regardless of filing status $150,000 – 65/Ovr or Disabled $75,000 – Everyone else Paid as Direct Property Tax Credit No Tenant Rebate Application Suspended by the State Budget

  44. PTR - Eligibility Must be Age 65/ovr or Disabled by 12/31/2010 NJ Resident for at least 10yrs Owned and lived in the home for at least 3 years Have fully paid property taxes due by June 1st of following year

  45. Property Tax Reimbursement Income Eligibility Limits 2010 Single/Married $80,000 2011 Single/Married $80,000

  46. 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

  47. PTR – First Time Filers Form PTR-1 – available online Establishes 2010 and 2011 Eligibility Reserves Base Year at 2010 Level Difference of 2011 & 2010 Taxes Proof of Property Taxes must be included with all PTR applications

  48. PTR – 2nd and Later Years File Form PTR-2 Comes Pre-Printed with Base Year Verifies 2011 Eligibility Difference of 2011 and Base Year Proof of Property Taxes must be included with all PTR applications

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