Question

Nj state tax

Forum|Forum|2 years ago
December 24, 2023
2 replies
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New Jersey absolutely taxes my 401k contributions each paycheck how do I let them know not to tax the$145000 during distribution

rjs

Employee

New Jersey stopped taxing 401(k) contributions in 1984. Unless you made contributions before January 1, 1984, your 401(k) distribution is fully taxable.

The income that is taxed by New Jersey each year is determined on your New Jersey tax return, not by anything on your paycheck. The New Jersey tax that is withheld from your paychecks is just a down payment towards the tax for the year that is calculated on your tax return. It's the New Jersey wages in box 16 of your W-2 that determines what income is taxed by New Jersey. Ask your payroll department to show you how the New Jersey wages in box 16 of your W-2 are calculated. Box 16 does not include 401(k) contributions.

Hal_Al

Employee

TurboTax (TT) will ask you if you made 401k contributions before 1984. If so, TT will use NJ worksheet C, to calculate the taxable portion of your 401k distribution.