Jean A. Cordasco CPA – South Jersey Tax Preparation
Do I have to file New Jersey state taxes?
Yes. Any person who lives within the state of New Jersey is subject to filing state taxes. This also applies to any person who moved out of the state during the year. They, too, must file state taxes. Not filing state taxes is a federal crime that can lead to penalties, interest, and additional fees in addition to what you already owe, with the most severe case being jail time.
However, if you, for instance, forget to file state taxes, that can be fixed by asking your accountant or tax preparer to write a letter to the IRS claiming that it was an unintentional mistake.
What is tax exempt in NJ?
Pensions up to $100,000 are excluded for Taxpayers who are age 62 or older (or disabled) by December 31st of the tax year.
What are some of the New Tax Laws for 2020?
As you begin planning to file your 2020 tax return, here are some tax laws passed over the last year that could affect you.
- Early distribution penalty waived. The 10% early distribution penalty on up to $100,000 of retirement withdrawals for coronavirus-related is waived during 2020. New rules allow tax liabilities on these distributions to be paid over a 3 year period.
- Required Minimum Distributions Waived 2020. Required Minimum distributions in the year 2020 for various retirement plans is suspended. The corresponding 50% penalty associated with not taking a distribution is also suspended in 2020.
- Medical deduction threshold decreases. Qualified medical expenses that exceed 7.5% of your adjusted gross income may be used as an itemized deduction. The lower threshold (formerly 10%) is a carryover from a late 2019 tax law.
- The tuition and fees deduction is available. The above the line deduction for up to $4,000 in qualified tuition and fees expenses that expired is still available in 2020. You will need to evaluate this tax break versus others like the American Opportunity Credit and the Lifetime Learning Credit.
- New Tax Form 1099-NEC for self-employed, independent contractor or freelancer. This form is exclusively for non employee compensation and also includes fees, commissions and awards. Deadline to submit is February 1, 2021.