New Jersey Slides Tax Year 2018 Other Income New Jersey Slides Tax Year 2018

Other Income – NJ Topics NJ topics to be discussed NJ Gambling Income NJ Property Tax Recoveries Cancellation of Credit Card Debt NTTC Training – TY2018

NJ Gambling Income Losses are deducted from winnings before reporting the net on NJ 1040 Line 24 NJ Lottery winnings of $10,000 or less per occurrence are not taxable in NJ; anything above $10,000, total amount is taxable Lottery winnings from other states are fully taxable Winnings/losses entered into the W-2G screen of the Federal return will automatically flow through from Federal to NJ return Capture gambling information in NJ Checklist Income Subject to Tax section for later entry in the TaxSlayer State section NTTC Training – TY2018

Property Tax Recoveries Process for handling property tax rebates received in current tax year for property taxes paid in a previous year Includes Property Tax Reimbursement (PTR) and HB Rebate is considered a recovery if taxpayer received a tax benefit in the prior year by claiming property taxes as an itemized deduction on Schedule A line 6 PTR – taxpayer itemized last year HB – taxpayer itemized 3 years ago NJ AARP TaxAide State Meeting 2018

NJ AARP TaxAide State Meeting 2018 Is Rebate a Recovery? If no recovery because taxpayer did not itemize in appropriate prior year, then ignore rebates received If rebate is a recovery, then must determine taxable amount and declare it as Other Income on new Schedule 1 line 21 NEW PTR - use State Tax Refund Worksheet to determine taxable amount HB – cannot use State Tax Refund Worksheet for taxes paid 3 years ago, so whole HB is taxable NJ AARP TaxAide State Meeting 2018

Why Change in Process from Last Year? Last year, we first tried to net the recovery amount against current year property taxes on Schedule A. Only if netting not possible, then declare as Other Income Objective of netting was to reduce total itemized deductions by the amount of the taxable recoveries This year, recommendation is not to net on Schedule A, but to declare all taxable recoveries as Other Income. Why? NJ AARP TaxAide State Meeting 2018

Why Change in Process from Last Year? (cont’d) Under new tax law, most of our taxpayers will claim standard deduction in 2018 and not itemize. Therefore, cannot net on Schedule A Under new tax law for Schedule A, the total of state income tax/sales tax (line 5) + property taxes (line 6) is capped at $10,000. Becomes extremely difficult to calculate the correct amount of net property tax to declare that will reduce total itemized deductions by the amount of the taxable recoveries NJ AARP TaxAide State Meeting 2018

Cancellation of Credit Card Debt 1099-C income is not taxable in NJ TaxSlayer automatically excludes cancellation of debt income from NJ Other Income NTTC Training – TY2018