Question

My NJ Tax return not picking property tax deduction but instead picking a credit

Forum|Forum|6 years ago
March 29, 2020
5 replies
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TurboTax Premier Online

M

MAK70

For the New Jersey state return, it is a credit if you qualify, there is no deduction on the state return.

J

jigarymAuthor

I have claimed deduction for many years. It is either deduction or credit and I want to use it as a deduction.

M

MAK70

Homeowners and tenants who pay property taxes, on a principal residence in New Jersey, either directly or through rent, may qualify for either a deduction or a refundable credit when filing an Income Tax return.

The property tax deduction reduces your taxable income. You can deduct your property taxes paid or $15,000, whichever is less.

Go back to the New Jersey Tax summary page and Update the Taxes and Credits. You will be able to enter the information in this section to get the deduction.

@jigarym

Y

yfeng-us

It does seem to be a bug to me. Can we get this fixed?

C

Cynthiad66

You must enter the property taxes in the Federal section of the return under Deductions and Credits.

Qualified homeowners and tenants are eligible for a deduction for property taxes they paid for the calendar year on their New Jersey principal residence. The new law increases the maximum Property Tax deduction from $10,000 to $15,000. For more information about the deduction, see Property Tax Deduction

Tenants and those homeowners who are not eligible for the Homestead Benefit because on October 1, 2020, they were not homeowners, may complete Form NJ-1040-HW to claim the property tax credit or they may claim the credit on Form NJ-1040. Do not file both Form NJ-1040 and Form NJ-1040-HW.

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D

dannitbt

I hit the same bug too. Please fix asap

E

ErnieS0

New Jersey gives qualified homeowners and tenants either a property tax deduction or credit. TurboTax will compute the best result for you.

Check your answers property tax deduction/credit screens to make sure you filled out the information correctly. Also check whether the about of property taxes paid on principal residence is correct on the screen We Need to Know About Your Property Taxes.

Homeowners and tenants who pay property taxes on a primary residence (main home) in New Jersey, either directly or through rent, may qualify for either a deduction or a refundable credit when filing an Income Tax return.

The property tax deduction reduces your taxable income. You can deduct your property taxes paid or $15,000, whichever is less. For Tax Years 2017 and earlier, the maximum deduction was $10,000. For tenants, 18% of rent paid during the year is considered property taxes paid. Keep in mind that the amount of property taxes paid that you can deduct depends on a number of factors, such as the number of owners or units. Visit Determining the Amount of Property Taxes Paid for more information.

The property tax credit reduces your tax due because it is subtracted directly from your tax liability. The benefit is a refundable credit of $50.

You can claim only one of these benefits on your tax return. If you qualify (see Eligibility Requirements), follow the instructions in the New Jersey Resident Income Tax return (Form NJ-1040 ) to determine if the credit or deduction will give you the greater benefit.

Refer to: NJ Income Tax Property Tax Deduction/Credit for Homeowners and Tenants

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L

lcolantuoni14

Just read this:

New Jersey: In New Jersey, renters have two choices when it comes to the renter's tax credit. The first is to take a deduction on their taxes of 18% of the amount paid in rent, while the second is a flat $50 credit on their taxes.

so based on my son paid 5804 then why isnt turbotax doing 18% deduction of $1044 instead doing credit of $50

DaveF1006

It depends. The property tax deduction is a itemized deduction. Your son may be claiming the standard deduction, which may be a bigger benefit than an itemized deduction. If so, the property tax credit is the only tax benefit he is eligible for.

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A

Allthethings

I stumbled upon this thread and wondering if anyone can clear this up for me.

I work for a NY company, so it determines that the Property Tax Credit is better for me.

However, my wife works for a NJ company, so it determines that taking the Property Tax Deduction is better for her.

Is it allowed that I can take the credit while she takes the deduction if we are married filing separately? Or do we have to force TT to have us take the same thing (whether it's credit or deduction)?

Furthermore, the property was acquired before marriage with the title being held as Tenants in Common. Vesting prior to our refinance post-marriage read "Me as to a 1/3 interest and Wife as to a 2/3 interest." After our refinance, the only vesting title change was to add the word married after "2/3 interest." Is the credit/deduction still 1/3 for me and 2/3 for wife or is it 50-50 regardless of the vesting? We've paid from a joint account.

I understand that usually it is better for married couples to file jointly, but based on my numbers crunching last night, I think separately might better work in our favour since the majority of our medical expenses in 2021 were paid with wife's HSA funds plus her work premiums (which all count as medical expenses for a NJ return since NJ doesn't see the same tax advantages on HSAs that you see federally).

M

mglauner

From your property title info, you could take 1/3 of the property tax credit/deduction and your wife could take 2/3, even if paid from a joint account.

If your property just had both your names on it, you could divide the Property Tax any way you agree on.

For New Jersey, your Filing Status has to be the same as your Federal filing status.

For each of your separate portions, you could either take the credit or the deduction on your individual separate returns.

Click this link for more info on the New Jersey Property Tax.

A

Allthethings

Thanks @mglauner but what I'm really concerned about is are we allowed to have one person take the Property Tax Credit and the other take the Property Tax Deduction. Generally if one person itemises, the other has to itemise. Is it not the same for Credit vs. Deduction?

Furthermore, would this 1/3 vs. 2/3 extend to medical expenses? Or do we do 50-50? We paid the majority of our 2021 medical expenses with spouse HSA (about 5k) and another grand outside of that (450 on my credit card which was ultimately paid from the joint checking though it was an expense incurred by me, 600ish directly from the joint checking - spouse was the one who incurred the expense, plus 800ish medical miles). Not to mention another 5.5k from medical insurance premiums through spouse's employment. I know federally that HSA withdrawals and insurance premiums can't be counted towards medical expenses as they are "pre-tax," but in NJ, HSA withdrawals for medical purposes and insurance premiums do count as the HSA contributions and premiums have been added to NJ wages.

Also thanks for clarifying that NJ status must be same as federal status. Was already planning on filing the same for all since I read NY (where I work) also requires same status for state and federal.