2009 Volunteer Tax Preparation

NJ Division of Taxationwww.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 InformationPage 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 IncomePage 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

ReportingPension, Annuity, and IRA Income

Line 19

Retirement Plans

Contributory Non-Contributory

fully taxable

Contributory Plans

Three components:Employee contributionsEmployer contributionsEarnings

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 toreporting 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 PensionExclusion 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 lessSingleMarried/CU - Filing Separate

$20,000 or lessMarried/CU Filing JointHead of HouseholdQualifying 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 PaymentsPage 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 NJ-2450 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 Used for 1st time applicants

Form PTR-2 2nd and later years

Proof of Property Taxes must be included