Question

New Jersey Pension Exclusion

Forum|Forum|5 years ago
June 21, 2020
1 reply
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New Jersey does not tax pension distributions until distribution exceeds the amount contributed after tax. Federal Taxable Income does not consider employees contributions to public pensions as taxable income. New Jersey does consider employees contributions to public pensions as taxable income. Consequently, pension distributions are subject to Federal tax, but only the distribution in excess of the employees contribution is subject to NJ income tax.

I have not found way to address this in Tubotax Deluxe 2019. This is the first year my wife has received a distribution from NJ Pension and Benefits.

Thanks for any help!

T

TomD8

Employee

Be sure to enter your wife's 1099-R correctly in the federal side of Turbotax, particularly the code in Box 7. The information will flow through to your NJ return and the program will calculate the NJ pension exclusion.

The 1099-R is entered in the Retirement Plans and Social Security section of Personal Income.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

K

KenL2Author

TomD8 - thank you for reply.

Box 7 shows distribution code 7-Normal Distribution. I think the only way Turbotax could calculate the exclusion is if it asked me to enter my wife's after tax contributions to pension.

T

TomD8

Employee

I suspect - but I don't know for certain - that your wife's 1099-R from the NJ Pension Plan already takes her post-tax contributions into account, and that the amounts in Boxes 1 and 2a are correct.

You could contact the NJ Division of Taxation at (609) 292-6400 to see if this is correct.

https://www.nj.gov/treasury/pensions/documents/factsheets/fact12.pdf

**Answers are correct to the best of my ability but do not constitute tax or legal advice.