New Jersey Division Of Taxation Issues Employer Withholding Tax Guidance In Respect To Covid
On March 31, 2020, New Jersey Updated its Website Issuing Employer Withholding Tax Guidance, regarding the sourcing of wages of employees who regularly work in the state but are telecommuting from an out of state home office. New Jersey acknowledges that employment tax wages are sourced based on where the service or employment is performed. However, the state suggests that during the temporary period of the COVID-19 pandemic, wage income will continue to be sourced as determined by the employer in accordance with the employers jurisdiction.
Other Taxes And Duties
Depending on your industry, you may be liable for certain other taxes and duties. For example, if you sell gasoline, you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods, you may need to pay certain duties.Speak to your accountant about any other taxes or duties you may need to withhold or pay.
Income Tax Rate And Withholding Instruction For Income Between $1 Million And $5 Million
New legislation enacted September 29, 2020, made several changes to the New Jersey Gross Income Tax Act as part of New Jersey’s Fiscal Year 2021 budget. The new law increases the Gross Income Tax rate for income between $1 million and $5 million and provides a new withholding rate for the remainder of 2020.
Effective January 1, 2020, the tax rate on that income bracket increases from 8.97% to 10.75%, regardless of filing status. Income over $5 million is already subject to this rate.
Effective immediately, employers must withhold Income Tax at the rate of 21.3% from salaries, wages and other remuneration in excess of $1 million, but not in excess of $5 million, during the taxable year. This higher withholding rate allows taxpayers affected by the rate increase to “catch up” on their withholdings for the year since the new tax rate is retroactive to January 1.
The Division of Taxation will not impose interest or penalties for insufficient payment of estimated tax and/or withholdings that may be due before November 1, 2020, if the underpayment is a result of the new tax rate.
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How Much Can You Get
Real gross domestic product increased at an annual rate of 2.6 percent in the third quarter of 2022 , according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.6 percent. The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency from this year’s values multiplied by 1.08 plus a rate that will produce this year’s debt service from this year’s values divided by the anticipated tax collection rate.
The New Jersey Income Tax
New Jersey collects a state income tax at a maximum marginal tax rate of %, spread across tax brackets. Unlike the Federal Income Tax, New Jersey’s state income tax does not provide couples filing jointly with expanded income tax brackets.
New Jersey’s maximum marginal income tax rate is the 1st highest in the United States, ranking directly below New Jersey’s %. You can learn more about how the New Jersey income tax compares to other states’ income taxes by visiting our map of income taxes by state.
Who has to file a New Jersey Income Tax Return?
You must file an income tax return with the New Jersey Division of Revenue of you are earned more then $10,000 in the preceding tax year . Both full-year residents and nonresidents who meet these requirements and have earned income in New Jersey must file.
You must submit estimated tax payments quarterly to New Jersey using Form NJ-1040-ES if your estimated tax owed exceeds $400 . If you do not pay enough estimated tax throughout the year, you may be required to pay additional interest – use Form NJ-2210 to calculate interest owed.
If at least 80% of your expected tax liability has been paid through tax witholding or quarterly payments, you can file for a 6-month extension to submit your resident income tax return.
New Jersey Property Tax / Rent DeductionOther New Jersey Deductions
Other New Jersey deductions and credits include the Earned Income Tax Credit , military pension income, and certain retirement account contributions.
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New Jersey Bait Deadline Extended
NJ PTE and BAIT returns due between March 15, 2022, and June 15, 2022, have an extended deadline of June 15, 2022. This extension includes the 2021 PTE Election, 2021 PTE-100 Tax Returns, 2021 PTE-200-T, 2021 Revocation forms, and 2022 Estimated Payments. The 2021 PTE-200-T, Extension of Time to File, grants a six-month extension to September 15, 2022. This date is not extended.
New Jersey Provides Grant For Businesses Impacted By Hurricane Henri/ida
The New Jersey Henri/Ida Business Assistance Program will provide $1,000 up to $5,000 to assist businesses and nonprofit organizations that suffered physical damage from either or both hurricanes. The following eligibility requirements must be met to apply for the program:
- Businesses and nonprofits with up to 50 full-time employees based on their Q2 2021 recent New Jersey WR-30 filing with the New Jersey Department of Labor.
- Damage or loss of revenue greater than $1,000 due to Hurricane Henry/Ida.
- Physical commercial location in the State .
- Registered to do business in the State at time of application.
- There are no outstanding tax debts or liabilities due to the State.
- The business or nonprofit is in Good Standing at the time of application with the NJ Department of Labor and Workforce Development and, if applicable, the New Jersey Department of Human Services and the New Jersey Division of Alcoholic Beverage Control.
In addition, the CEO or equivalent officer of either a business or nonprofit must certify that the entity was in operation on August 1, 2021, and incurred physical damage from Hurricane Henri on August 22ndor 23rd, 2021, or Hurricane Ida on September 1st, 2nd, or 3rd, 2021. These grants may be used only to pay for August rent or mortgage payment. However, the grant may not be used for capital expenses, remediation, or construction. Applicants may apply from Friday, September 17, 2021, through Friday, September 24, 2021.
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Request For Copies Of Returns
Q. How do I request a copy of a tax return I have filed?
A. In order to give you this information, please provide your social security number, name, your filing status for that year, the amount of refund or balance due, and your address on the return at that time. You may email your request by clicking the personal income tax email address in the contact file, or contact our Public Service Bureau at 577-8200.
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New Jersey Issues New Change Regarding Combined Members Claiming Protection Under Public Law 86
On April 12, 2022, The New Jersey Division of Taxation announced changes to its policy for members of combined groups claiming protection from New Jersey Corporate Business Tax under P.L. 86-272. P.L. 86-272 is a federal law that prohibits states from imposing a net income tax on out-of-state sellers whose in-state activities are limited to the solicitation of sales of tangible personal property and the orders are accepted and fulfilled from outside the state. Prior to the policy change, the NJ CBT-100U return instructions stated if one member of a combined group has nexus and sufficient activities in New Jersey to be taxed based on income, no member that has nexus with New Jersey may claim P.L. 86-272 protection. However, the new policy states that protection for each member of the combined group will be determined on an entity-by-entity basis. With this change, affected taxpayers who filed New Jersey combined tax returns beginning on or after the 2019 tax year and have members in their combined group who can claim P.L. 86-272 protection may amend these returns to claim the benefit from the policy change. If you have questions about whether your company may claim protection under P.L. 86-272 in New Jersey or any other State, please contact a member of the Withum SALT group.
States With Flat Tax Rates
Among the states that do have income taxes, many residents get a break because the highest rates don’t kick in until upper-income levels. But this isn’t the case in the 10 states that have flat tax rates as of 2021. The flat-tax states and their rates, from highest to lowest, can be seen in the table below.
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Here’s How The Irs Calculates Your Income Tax
Single filers: The standard deduction for single filers in 2022 has been fixed at $12,950. This is a $400 jump from $12,550 in 2021. Married filers filing jointly: The standard deduction for married filers filing jointly is $25,900 in 2022. This was $25,100 in 2021 and has seen an increase of $800. The lowest rate applies to single and married taxpayers who file separate returns on incomes of up to $12,000 as of the tax year 2021, the return you’ll file in 2022. Those who are married and who file joint returns qualify for the lowest rate on incomes of up to $21,600. The next tax brackets jump to 3.762%, then to 3.819%, then to 3.876%. 3. You can use this tax calculator to: estimate your federal and state income taxes. calculate your expected refund or amount of owed tax. check your eligibility for a variety of tax credits. compare your tax burden in different states. Once you have filled out the calculator once, feel free to make changes to your income, state, filing status, or.
Nj Announces Extensions Only For April 15 2020 Tax Season
The COVID-19 Fiscal Mitigation Act was signed into law by Governor Murphy. The Act automatically extends the due date for Individual Gross Income Tax, Partnership, and Corporation Business Tax calendar filers to July 15th as well as estimated tax payments. Penalties and interest will not be imposed upon the remaining amount of tax due between the original and extended due date for returns and payments submitted by July 15th, 2020. However, the extension only applies to the April 15th due date.
Furthermore, the Division is providing taxpayers with increased flexibility to assist taxpayers having financial difficulties resulting from the COVID-19 pandemic. Taxpayers may suspend payments on existing payment plan for up to 90 days.Taxpayers are required to contact the payment plan unit to change their payment schedule.For additional information, please refer here.
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Earned Income Tax Credit
ââYou can claim the New Jersey Earned Income Tax Credit if youâre eligible for the federal EITC, which is a refundable tax credit. Your NJEITC is 40% of your federal earned income tax credit amount. For example, if your federal earned income tax credit is $4,000, you may qualify for a NJEITC of $1,600.
New Jersey Tax Deductions
Income tax deductions are expenses that can be deducted from your gross pre-tax income. Using deductions is an excellent way to reduce your New Jersey income tax and maximize your refund, so be sure to research deductions that you mey be able to claim on your Federal and New Jersey tax returns. For details on specific deductions available in New Jersey, see the list of New Jersey income tax deductions.
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New Jersey Confirms Guidance On Telecommuting For Personal Income Tax And Sales Tax Purposes
Updating/confirming State guidance, the New Jersey Division of Taxation maintains the position that with respect to the COVID-19 pandemic, wage income will continue to be sourced as determined by the employer in accordance with the employers jurisdiction. Taxpayers may use a different allocation if warranted . Additionally, as long as an out-of-state seller did not maintain any physical presence in New Jersey during the COVID-19 pandemic other than employees working from home in the state, and the taxpayer is below the New Jersey economic thresholds for nexus, then the out-of-state seller will not be considered to have nexus for sales tax purposes.
New Jersey Modifies Sales Tax Exemption For Recycled Materials
The State of New Jersey released a statement that will require the Division of Taxation to give an annual review on the viability of sales tax exemption for qualifying recycled materials for manufacturing companies. Once the annual review, if completed, the results will be reviewed by the Legislature for whether the exemption should continue. Until legislation is enacted terminating the exemption, manufacturing facilities should continue to their exemption process of recycled materials.
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States With The Lowest Taxes And The Highest Taxes
Where you live can help or hinder your ability to make ends meet. A myriad of taxesproperty, license, state and local sales, property, inheritance, estate and excise taxes on gasolineeat away at your disposable income. Weighing the tax landscape against your financial picture lets you stretch your dollars. Here’s a roundup of the highest and lowest taxes by state.
“Location, location, location” is a focus that applies to more than just housing. Where you live can help or hinder your ability to make ends meet.
A myriad of taxes such as property, license, state and local sales, inheritance, estate, and excise taxes can eat away at your income. Often, the biggest tax ticket citizens face after paying the Internal Revenue Service is the one their state presents. As a result, identifying the states with the lowest taxes might be a smart financial move to make.
Currently, 41 states and the District of Columbia levy a personal income tax. Weighing the tax landscape against your financial picture could help you stretch your dollars further.
Important Income Tax Changes For Tax Year 2021
The filing deadline is Monday, April 18, 2022, for calendar-year taxpayers â matching the due date for the federal Form 1040.
Fiscal year filers must file their returns by the 15th day of the fourth month following the close of the fiscal year. If a due date falls on a Saturday, Sunday, or legal holiday, that return is due on the following business day.
Retirement Income Exclusions
For Tax Year 2021, the income limit for a Retirement Income Exclusion increases to $150,000 See Income Exclusions for more information.
Meals on Wheels in New Jersey Fund – Beginning with the 2021 NJ-1040, you can make a donation to the Meals on Wheels in New Jersey Fund using code 29 on lines 73-75 of the return. Donations would specifically benefit local, independently-run chapters of Meals on Wheels that operate in New Jersey, enabling senior citizens to live healthier lives in their own home.
Earned Income Tax Credit
The New Jersey EITC amount is 40% of the federal Earned Income Tax Credit for 2021. The age requirement for an NJEITC has expanded to those as young as 18 years of age, as well as those over age 65, with no dependents.
Child and Dependent Care Credit
The taxable income amount increased to $150,000 or less to qualify for this .
The Philadelphia nonresident wage tax rate for 2021 was 3.5019% from January 1 to June 30, and 3.4481% from July 1 to December 31.
Military Personnel & Veterans
Property Tax Relief Programs
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Millionaire Tax Flight Is A Myth
Claims that millionaires and small business owners spooked by higher income taxes will flee the state are commonplace, but that does not make them accurate. These anecdotal stories are unsupported by real-world statistics. In fact, the majority of rigorous studies on the subject have found a negligible correlation between state taxes and interstate moves.
When income taxes were first raised on New Jerseys highest earners back in 2004, one study found a slight uptick in the number of millionaires who left New Jersey. Their exit cost the state about $16 million between 2004 and 2007, but the state gained about $1 billion from those who remained. In other words, the revenue loss was less than 2 percent of the revenue gained. Whats more, the number of New Jersey tax filers with income over $500,000 rose by 82 percent between 2003 and 2007, nearly doubling from 28,178 to 51,187 . And that trend has continued after a sharp dip during the Great Recession of 2008 and 2009. Since hitting a recessionary low point in 2009, the number of New Jersey tax filers with income over $500,000 has rebounded by 44 percent, growing from 38,496 to 55,322 in 2014 , even as New Jerseys overall economic recovery has remained weak.