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A Personal Tax And Accounting Firm Serving Individuals And Businesses in New Jersey

Increased SALT Deduction For Tax Year2025

Please see increased State and Local Tax (SALT) deduction information below from the IRS. It could be a good year to prepay the 1st and 2nd quarter 2026 property taxes before year-end. Please reach out to me if you want to discuss further.

An increase to the limitation on the itemized deduction for state and local taxes. Individuals who itemize their deductions can claim up to $40,000 ($20,000 if married filing separately) for state and local taxes paid. This limit was increased from $10,000 ($5,000 if married filing separately). The maximum deduction is reduced for taxpayers with modified adjusted gross income over $500,000 ($250,000 if married filing separately).

See How to update withholding to account for tax law changes for 2025 | Internal Revenue Service

2025 and 2026 401K Contribution Maximum

Below is an update on the maximum 401k contribution amounts for tax year 2025 and 2026:

For Tax Year 2025, the 401K maximum contributions are as follows:

Under 50 years old: $23,500

Ages 50-59 years old: $23,500 plus $7,500 catch-up contribution

Ages 60-63 years old: $23,500 plus $11,250 catch-up contribution

Ages 64 and older: $23,500 plus $7,500 catch-up contribution

For Tax Year 2026, the 401K maximum contributions are as follows:

Under 50 years old: $24,500

Ages 50-59 years old: $24,500 plus $8,000 catch-up contribution

Ages 60-63 years old: $24,500 plus $11,250 catch-up contribution

Ages 64 and older: $24,500 plus $8,000 catch-up contribution

These contributions are deductible for NJ purposes as well. The 401k plan is one of the only retirement plans that allows a deduction for NJ purposes.

2024 NJ Senior Freeze Update

Please see the following from the New Jersey Division of Taxation:

2024 Senior Freeze Payment Schedule
We have begun issuing 2024 Senior Freeze payments to qualified applicants as of July 15, 2025. Paper checks will continue to be issued on a rolling basis, and direct deposits started to be issued on August 1, 2025. If you filed before May 1, 2025, checks began to be issued as of July 15, 2025. If you filed between May 1 and June 1, 2025, checks will be issued beginning September 1, 2025. If you filed between June 2 and September 1, 2025, checks will be issued beginning November 1, 2025. And if you filed between September 2 and October 31, 2025, checks will be issued beginning December 1, 2025.

One Big Beautiful Bill Tax Changes

This is a helpful Fact Sheet from the IRS on some tax year tax changes from the One Big Beautiful Bill (OBBB). They impact tax year 2025.

FS-2025-03, July 14, 2025

Note: This Fact Sheet has been updated July 25 by adding to the section on “No Tax on Car Loan Interest” new language describing the requirement for “Final assembly in the United States.”

Below are descriptions of new provisions from the One Big Beautiful Bill Act, signed into law on July 4, 2025, as Public Law 119-21, that go into effect for 2025.

“No Tax on Tips”

  • New deduction: Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.
    • “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing.
    • Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.
    • Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
  • Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
    • Self-employed individuals in a Specified Service Trade or Business (SSTB) under section 199A are not eligible. Employees whose employer is in an SSTB also are not eligible.
    • Taxpayers must:
      • include their Social Security Number on the return and
      • file jointly if married, to claim the deduction.
  • Reporting: Employers and other payors must file information returns with the IRS (or SSA) and furnish statements to taxpayers showing certain cash tips received and the occupation of the tip recipient.
  • Guidance: By October 2, 2025, the IRS must publish a list of occupations that “customarily and regularly” received tips on or before December 31, 2024.
    • The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and payors subject to the new reporting requirements.

“No Tax on Overtime”

  • New deduction: Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation — that is required by the Fair Labor Standards Act (FLSA) and that is reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.
    • Maximum annual deduction is $12,500 ($25,000 for joint filers).
    • Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
  • Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
    • Taxpayers must:
      • include their Social Security Number on the return and
      • file jointly if married, to claim the deduction.
  • Reporting: Employers and other payors are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.
  • Guidance: The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payors subject to the new reporting requirements.

“No Tax on Car Loan Interest”

  • New deduction: Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)
    • Maximum annual deduction is $10,000.
    • Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).
  • Qualified interest: To qualify for the deduction, the interest must be paid on a loan that is:
    • originated after December 31, 2024,
    • used to purchase a vehicle, the original use of which starts with the taxpayer (used vehicles do not qualify),
    • for a personal use vehicle (not for business or commercial use) and
    • secured by a lien on the vehicle.

If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

  • Qualified vehicle: A qualified vehicle is a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, and that has undergone final assembly in the United States.
  • Final assembly in the United States: The location of final assembly will be listed on the vehicle information label attached to each vehicle on a dealer’s premises. Alternatively, taxpayers may rely on the vehicle’s plant of manufacture as reported in the vehicle identification number (VIN) to determine whether a vehicle has undergone final assembly in the United States.
    • The VIN Decoder website for the National Highway Traffic Safety Administration (NHTSA) provides plant of manufacture information. Taxpayers can follow the instructions on that website to determine if the vehicle’s plant of manufacture was located in the United States.
  • Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
    • The taxpayer must include the Vehicle Identification Number (VIN) of the qualified vehicle on the tax return for any year in which the deduction is claimed.
  • Reporting: Lenders or other recipients of qualified interest must file information returns with the IRS and furnish statements to taxpayers showing the total amount of interest received during the taxable year.
  • Guidance: The IRS will provide transition relief for tax year 2025 for interest recipients subject to the new reporting requirements.

Deduction for Seniors

  • New deduction: Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law.
    • The $6,000 senior deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify).
    • Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
  • Qualifying taxpayers: To qualify for the additional deduction, a taxpayer must attain age 65 on or before the last day of the taxable year.
  • Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
    • Taxpayers must:
      • include the Social Security Number of the qualifying individual(s) on the return, and
      • file jointly if married, to claim the deduction.

See One Big Beautiful Bill Act: Tax deductions for working Americans and seniors | Internal Revenue Service

2024 NJ ANCHOR Application – Under 65 and Not Collecting Social Security Disability (Homeowners/Renters)

Please see below from the NJ Division of Taxation regarding the 2024 Anchor Benefit:

We will file on behalf of most eligible New Jersey homeowners and renters under 65 and not collecting Social Security disability benefits on September 1, 2025, based on information contained in their 2021 application. We will begin sending those taxpayers their Anchor Benefit Confirmation Letter on August 13, 2025. If you receive a letter and need to change your banking information, or prefer to request a paper check, then you will have to file your own application by August 31, 2025.

If you do not receive an Anchor Benefit Confirmation Letter, you will have the opportunity to file an Application for Property Tax Relief on your own when online filing is available in mid-August.

New in 2025 – We will not be sending out mailers with ID/PIN information to file your application. Instead, all applicants must verify their identity through ID.me while using our online web application.

When applying, have your 2024 property tax details (i.e. County/Municipality Code, Block/Lot/Qualifier, tax amounts) available as well as the gross income reported on your 2024 NJ-1040.

See NJ Division of Taxation – ANCHOR Program

NJ Sales Tax on Tariffs

Good information to know from the NJ Division of Taxation regarding the sales tax on tariffs:

Sales Tax Treatment of Tariff Mark Ups
Tariffs are a federal tax imposed on importers when goods are imported. The imposition of tariffs could result in an increased product cost passed down to distributors, wholesalers, and, finally, the retail sellers that are responsible to collect New Jersey Sales Tax from the end user. When a seller passes along the cost of a tariff to the consumer/purchaser, the charges are subject to Sales Tax as part of the taxable sales price, even if the tariff is separately stated to the purchaser.

See NJ Division of Taxation – Sales Tax Treatment of Tariff Mark Ups for more information.

Installment Agreement Requests

Installment Agreement Requests – If you owe taxes and cannot pay right away, these are the links for the forms to request installment agreements:

IRS Payment Plan Request

NJ Payment Plan Request

NY Payment Plan Request – See below from their website:

To make your request online:

  1. Have your bank account and routing numbers available.
  2. Log in to your Online Services account (You’ll need to create an account if you don’t already have one).
  3. Select the ≡ Services menu in the upper left-hand corner of your Account Summary homepage.
  4. Select Payments, bills and notices, and then Installment payment agreement from the drop-down menu. 

100% Self-Employed Health Insurance Deduction for Business Owners

Please see information below from the IRS about the Self-Employed Health Insurance Deduction:

The insurance plan must be established, or considered to be established, as discussed in the following bullets, under your business.

  • For self-employed individuals filing a Schedule C (Form 1040) or Schedule F (Form 1040), a policy can be either in the name of the business or in the name of the individual.
  • For partners, a policy can be either in the name of the partnership or in the name of the partner. You can either pay the premiums yourself or the partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.
  • For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. You can either pay the premiums yourself or the S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts in box 1 of Form W-2 as wages to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.

See Instructions for Form 7206 (2024) | Internal Revenue Service

NY School Tax Relief (STAR) program

Below is information from the NY Department of Taxation and Finance about the STAR program for NY Homeowners. See STAR resource center

The School Tax Relief (STAR) program offers property tax relief to eligible New York State homeowners.

If you are eligible and enrolled in the STAR program, you’ll receive your benefit each year in one of two ways:

  • STAR credit. If you are registered for the STAR credit, the Tax Department will issue your STAR benefit via check or direct deposit. You can use your STAR benefit to pay your school taxes. You can receive the STAR credit if you own your home and it’s your primary residence and the combined income of the owners and the owners’ spouses is $500,000 or less.
  • STAR exemption: a reduction on your school tax bill. If you’ve been receiving the STAR exemption since 2015, you can continue to receive it for the same primary residence. As long as you remain eligible, you’ll see a reduction on your school tax bill for the amount of your STAR exemption. Note: The STAR exemption is no longer available to new homeowners.

Please go to STAR resource center to register.

FinCen Beneficial Ownership Information (BOI) Report 3/26/2025 Update

As per FinCEN: (See www.fincen.gov/boi)

ALERT [Updated March 26, 2025]: All entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners are now exempt from the requirement to report beneficial ownership information (BOI) to FinCEN. Existing foreign companies that must report their beneficial ownership information have at least an additional 30 days from March 26, 2025—until April 25, 2025, for most companies—to do so. For more information, see press release and alert.

2024 NJ Anchor Information

As per NJ Division of Taxation:

Eligible New Jersey homeowners and renters under 65 and not collecting Social Security disability benefits may have their ANCHOR applications automatically filed when online filing becomes available in Summer 2025. If you do not receive an Auto-File Confirmation Letter, you will have the opportunity to file an Application for Property Tax Relief on your own.

Homeowners:

You are eligible if:

  • You were a New Jersey resident; and
  • You owned and occupied a home in New Jersey that was your principal residence (main home) on October 1, 2024; and
  • Your home was subject to property taxes; and
  • Your 2024 New Jersey gross income was not more than $250,000.

Renters:

You are eligible if:

  • You were a New Jersey resident; and
  • You rented and occupied a residence in New Jersey that was your principal residence (main home) on October 1, 2024; and
  • Your name was on the lease or rental agreement; and
  • You paid rent; and
  • The rental property was subject to local property taxes, (see Qualified and Non-Qualified Rental Properties); and
  • Your 2024 New Jersey gross income was not more than $150,000.

Filing Deadline

October 31, 2025

See NJ Division of Taxation – ANCHOR Program

2/27/2025 FinCEN BOI Update – no fines or penalties with the 3/21/2025 deadline

Please see release below from FinCEN on the BOI reports; and at the following link: FinCEN Not Issuing Fines or Penalties in Connection with Beneficial Ownership Information Reporting Deadlines | FinCEN.gov

FinCEN Not Issuing Fines or Penalties in Connection with Beneficial Ownership Information Reporting Deadlines

Immediate Release

February 27, 2025

WASHINGTON––Today, FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines. No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed. This announcement continues Treasury’s commitment to reducing regulatory burden on businesses, as well as prioritizing under the Corporate Transparency Act reporting of BOI for those entities that pose the most significant law enforcement and national security risks.

No later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines, recognizing the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.

FinCEN also intends to solicit public comment on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities, as well to determine what, if any, modifications to the deadlines referenced here should be considered.

NJ Property Tax Relief – Combined Application

Please see post below from the NJ Division of Taxation and see NJ Division of Taxation – Property Tax Relief Programs for more information.

Property Tax Relief Programs: New Combined Application

The Division of Taxation has made it easier for seniors and those receiving Social Security Disability in New Jersey to apply for Property Tax Relief through a new, streamlined process. Those taxpayers – for the first time – can apply for three different property tax relief programs on a single form. The Division created a combined application for the Senior Freeze (Property Tax Reimbursement), ANCHOR, and Stay NJ programs for residents 65 and over, or those collecting Social Security Disability Benefits. We will determine your eligibility, and send you a letter outlining the specific benefits for which you qualify. Online filing and a mail-in form will be available starting in February. You can easily find updated information regarding all three programs, including new eligibility requirements and how benefits are calculated. We also created a new set of frequently asked questions, a list of outreach events to explain the programs, and the option to schedule a telephone appointment with our agents – all in one convenient place.

Beneficial Ownership Information Reporting Update

Please see update below from fincen.gov:

BOI e-Filing Alert:  Please note that beneficial ownership information reporting requirements have been affected by a recent federal court order. The Department of the Treasury is appealing that order. In the meantime, reporting companies are not currently required to file a BOIR and are not subject to liability if they fail to do so while the applicable order remains in force. However, reporting companies may still opt to file a BOIR. More information is available on our website (https://www.fincen.gov/boi

2023 NJ Senior Freeze

Please see requirements for 2023 NJ Senior Freeze below from the NJ Division of Taxation. Also note the big increase in the income limit from prior years.

Eligibility Requirements

Age/DisabilityYou (or your spouse/civil union partner) were:65 or older on December 31, 2022; orActually receiving federal Social Security disability benefit payments (not benefit payments received on behalf of someone else) on or before December 31, 2022.
Home OwnershipHomeowners. You owned and lived in your home since December 31, 2019, or earlier (and you still owned and lived in that home on December 31, 2023).Mobile Home Owners. You leased a site in a mobile home park where you placed a manufactured or mobile home that you owned since December 31, 2019, or earlier (and still lived in that home/leased the site on December 31, 2023).If you moved from one New Jersey property to another and received a reimbursement for your previous residence for the last full year you lived there, you may qualify for an exception to re-applying to the Senior Freeze Program. Visit Requirements for Resuming Eligibility for more information.
Property Taxes/ Site FeesHomeowners. The 2022 property taxes due on your home must have been paid by June 1, 2023, and the 2023 property taxes must be paid by June 1, 2024.Mobile Home Owners. Your site fees must have been paid by December 31 of each year respectively.
Income LimitYour total annual income (combined if you were married or in a civil union and lived in the same home) was:2022 – $150,000 or less; and 2023 – $163,050 or less See Income Limits History  for past years’ income limit amounts.
You are not eligible for a reimbursement on:

A vacation home or second home;
Property that you rent to someone else;
Property that consists of more than four units; or
Property with four units or less that contains more than one commercial unit.
Are completely exempt from paying property taxes on your home; or
Made P.I.L.O.T. (Payments-in-Lieu-of-Tax) payments to your municipality.

Life Estate (Life Tenancy). You are considered the owner of the property if you have life estate rights or hold a lease for 99 years or more. You must include with your application a copy of an official document (e.g., deed, lease) establishing your right to occupy the property.

NJ Senior Freeze Change

This is an important change to the NJ Senior Freeze program from the NJ Division of Taxation:

Important Program Change

P.L. 2023, c.75 which was signed into law June 30, 2023, expands the income limit and simplifies the residency requirements for new Senior Freeze program applicants.

Beginning with the 2023 filing season, the law:

  • Increases the income limit for the program to $150,000; and
  • Eliminates the requirement that an applicant must be a New Jersey resident for 10 consecutive years.

The age/disability and three-year homeownership requirements remain unchanged.

NJ Income Tax Updates

These are some helpful updates from the NJ Division of Taxation for Tax Year 2023:

Filing Information

Filing Deadline. The filing deadline is Monday, April 15, 2024, for calendar-year taxpayers – matching the due date for the federal Form 1040.

Fiscal-year filers must submit their returns by the 15th day of the fourth (4th) 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.

Deductions, Exclusions, and Credits

Credit for Excess UI/WF/SWF; DI; FLI Withheld

The maximum employee Unemployment Insurance/Workforce Development Partnership Fund/Supplemental Workforce Fund contribution was $174.68.

The maximum employee Disability Insurance contribution was $0.

The maximum employee Family Leave Insurance contribution was $94.08.

If you had two or more employers, you may have contributed more than the maximum amount(s). To claim credit on the tax return for excess withholding, complete Form NJ- 2450.

New Jersey Child Tax Credit. Residents with taxable income of $80,000 or less are eligible for a credit of up to $1,000 for each dependent who is age 5 or younger on the last day of the tax year. You are not eligible if your filing status is married filing separately.

Credit for Taxes Paid to Other Jurisdictions. The Philadelphia nonresident wage tax rate was 3.44% (.0344) for the entire 2023 tax year.

Health Insurance EZ Enroll. If you or anyone in your tax household does not have minimum essential health coverage, you must complete the new NJ-EZ Enroll form. If you would like Get Covered New Jersey to help you obtain coverage, use lines 53a-53b. By agreeing to get coverage, you do not have to make a shared responsibility payment on line 53c.

Convenience of the Employer Sourcing Rule. Under the convenience rule, a nonresident taxpayer’s employee compensation from a New Jersey employer for the performance of personal services is sourced to the employer’s location (New Jersey) if the employee is working from an out-of-state location (e.g. at home in their resident state) for their own convenience rather than for the necessity of their employer

NJ Anchor Update

The ANCHOR benefit for senior citizens over 65 has increased by $250. If you receive an ANCHOR Benefit Confirmation Letter and all of the information contained in the letter is correct, you do not have to file an application for the 2020 benefit. We will file an application on your behalf based on your 2019 application.

See NJ Division of Taxation – ANCHOR Program

NJ Senior Freeze Changes

Beginning with the 2023 filing season, the income limit for the Property Tax Relief program will increase to $150,000 from $99,735, and the requirement that an applicant must be a New Jersey resident for 10 consecutive years will be eliminated. Additionally, a new State law allows a one-time exception for taxpayers to retain their base year when their income exceeds the limit on the application.

See NJ Division of Taxation – NJ Division of Taxation – Senior Freeze (Property Tax Reimbursement)

New Jersey Tax Update – Employer Sourcing

Convenience of the Employer Sourcing Rule Enacted for Gross Income Tax:

A new law was signed July 21, 2023, that establishes a “convenience of the employer test” (convenience rule) for nonresident income sourcing. Under the convenience rule, a nonresident taxpayer’s employee compensation from a New Jersey employer for the performance of personal services is sourced to the employer’s location (New Jersey) if the employee is working from an out-of-state location for their own convenience rather than for the necessity of their employer. The new law is retroactive to January 1, 2023. Affected taxpayers must begin withholdings and/or make estimated payments for Tax Year 2023 as soon as possible. Employers should consider making adjustments to withholdings as an accommodation to employees, so that they are not underpaid. The Division will not impose penalty and interest as long as the taxpayer begins complying with the new law as of September 15, 2023. 

See NJ Division of Taxation – Convenience of the Employer Sourcing Rule Enacted for Gross Income Tax (state.nj.us)

ANCHOR Deadline Extended: Apply for up to $1,500 in Tax Relief

More than three million residents are eligible for up to $1,500 in property tax relief under the ANCHOR program. Tenants and renters who were previously ineligible because their unit was covered by a PILOT agreement can now apply for the ANCHOR benefit. To be eligible for this year’s benefit, you must have occupied your primary residence on October 1st, 2019. You must also file (or be exempt from) NJ income taxes. The deadline for filing has been extended to January 31st, 2023.

An ANCHOR for Homeowners and Renters

New Jersey taxpayers can now apply for the Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) program. The State’s ANCHOR program replaces the Homestead Benefit and helps eligible renters and homeowners to offset local property taxes.

To qualify, the applicant must have either owned, or rented, their residence as of October 1, 2019. If a homeowner or tenant has moved since then, including out of state, the person is still eligible to file if they meet the other requirements.

Homeowners may file online, or by phone. However, certain homeowners may need to file by paper. Tenants may file online, but a paper application is available if preferred. Tenants have no option to file by phone. Eligible homeowners require an ID and PIN to file electronically. Tenants will need to have a valid taxpayer identification number (Social Security number or Individual Tax Identification Number) to file.

ANCHOR recipients can specify on the applications whether they want to receive a check or direct deposit payment. The due date for the application is December 30, 2022. The Division expects to issue payments in May 2023.

Visit ANCHOR Webpage: https://nj.gov/treasury/taxation/anchor/index.shtml

2019 Anchor Program

New Jersey 2019 ANCHOR Program
A new Property Tax Relief Program is replacing the previous Homestead Benefit program. The Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) program will benefit a large number of homeowners and includes tenants. Homeowner benefit amounts will be $1,500 for taxpayers with 2019 gross incomes up to $150,000 or $1,000 for those with 2019 gross income above $150,000 but no higher than $250,000.  Tenants with 2019 gross income up to $150,000 will qualify for a $450 benefit. Applications will be available this fall, and the deadline for submission is December 30, 2022. The benefit will be paid no later than May 2023.

Roth 401K

This is a good article on Roth 401ks from Kiplinger Retirement.  I invest in Roth 401k and Roth IRAs.  It avoids a tax bill on the investments and gains in your retirement accounts when you begin making distributions at retirement.

ROTH 401K

 

 

Work Opportunity Tax Credit

If you hire a new employee that has been unemployed for 27 weeks or more and received unemployment benefits, there is a 40% credit on the first $6,000 in wages called the Work Opportunity Tax Credit.  Something to think about when hiring someone new and they tell you they have been out of work for more than 6 months.

September Newsletter

1. Coping with Overlooked College Expenses

2. Post-Retirement Work and the Impact on Social Security, Taxes and Health Care

3. Job Search Expenses May be Deductible

4. Tax Credits That Can Help Lower College Costs

5. The Tax Effects of Divorce or Separation

6. Tax Considerations (and Advantages)

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1. COPING WITH OVERLOOKED COLLEGE EXPENSES

You know college is going to cost a lot, but are you sure you know exactly how much? Here are some of the unexpected charges you should anticipate and advice on ways to deal with them. https://www.njcpa.org/stay-informed/tax-financial/full-article/2015/08/26/coping-with-overlooked-college-expenses

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2. POST-RETIREMENT WORK AND THE IMPACT ON SOCIAL SECURITY, TAXES AND HEALTH CARE

Individuals thinking about returning to the workforce after retiring need to learn if and how Social Security benefits, health insurance and taxes will be affected so that they don’t lose benefits or end up in a higher tax bracket. https://www.njcpa.org/stay-informed/tax-financial/full-article/2015/08/26/post-retirement-work-and-the-impact-on-social-security-taxes-and-health-care

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3.

JOB SEARCH EXPENSES MAY BE DEDUCTIBLE

If you look for a job in the same line of work, you may be able to deduct some of your job search costs. Here are some key tax facts you should know about if you search for a new job. https://www.njcpa.org/stay-informed/tax-financial/full-article/2015/08/28/job-search-expenses-may-be-deductible

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4. TAX CREDITS THAT CAN HELP LOWER COLLEGE COSTS

Are you looking for ways to minimize the costs of higher education? There are some tax laws that can help lower your outlays. https://www.njcpa.org/stay-informed/tax-financial/full-article/2015/08/26/tax-credits-that-can-help-lower-college-costs

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5. THE TAX EFFECTS OF DIVORCE OR SEPARATION

Income tax may be the last thing on your mind after a divorce or separation. However, these events can have a big impact on your taxes. Here are some key tax tips to keep in mind if you get divorced or separated. https://www.njcpa.org/stay-informed/tax-financial/full-article/2015/08/24/the-tax-effects-of-divorce-or-separation

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6. TAX CONSIDERATIONS (AND ADVANTAGES) FOR SMALL BUSINESSES

Are you thinking of launching your own business? It’s critical to understand the many rules and regulations that apply to you. https://www.njcpa.org/stay-informed/tax-financial/full-article/2015/08/26/tax-considerations-(and-advantages)-for-small-businesses

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ABLE Accounts For The Disabled or Blind

Good news for those who are blind or disabled. The States received approval the IRS to offer ABLE accounts. Nondeductible contributions of up to $14,000 per year can be made for
a person who became blind or disabled before age 26. Distributions are tax-free if used for housing, transportation, education, job training and similar expenses.

New And Re-hired Employee Reporting

State and federal laws require that all employers report new and re-hired employees to a statewide directory within 20 days.  The site for NJ is nj-newhire.com.  For NY it is www.nynewhire.com.

Health Care Exchange Enrollment

You have until February 15th to sign up for an individual policy for 2015 on the health care exchanges. Please go to healthcare.gov if you are living in New Jersey since there is no New Jersey exchange. If you are living in New York, please use the following link for the New York exchange: nystateofhealth.ny.gov

Medicare Open Enrollment

Medicare open enrollment is from October 15th until December 7th for 2015 plans. For those already on Medicare, it is a good time to review alternative plans. A good website to find Part D or Advantage plan options is https://www.medicare.gov/find-a-plan.

IRS Filing Delays

Due to last year’s 16 day government shutdown, the IRS will not be processing 2013 personal returns until January 31st.   The IRS started accepting business returns on January 13th.

Health care – Refundable Credit Under The Affordable Care Act

Under the Affordable Care Act, taxpayers will be able to get a credit to help them buy health insurance. To get the credit, household income must be between 100% and 400% of the federal poverty level. This is currently $11,490 to $45,960 for singles and $23,550 to $94,200 for a family of four. People who are eligible for Medicare or other federal insurance do not qualify for the credit.

Health Reform – Individual Mandate Effective January 1, 2014

Effective January 1, 2014, individuals must have minimum essential health insurance coverage for themselves and their dependents to avoid a tax. This includes coverage provided by employers that meet minimum federal requirements, coverage through an exchange and federal coverage such as Medicare, Medicaid, Tricare and veterans coverage. Please contact me if you would like to discuss further.

Same-Sex Marriage Changes

The Supreme Court has struck down the Defense of Marriage Act. Couples who get married in the District of Columbia or in the 13 states that allow same-sex marriage can now file federal income tax returns jointly. Estate planning will also be easier. Please contact me if you would like to discuss further.

Health Exchange Marketplace Standard Consumer Application

Here are the links for the Health Insurance Marketplace Standard Consumer Application from cms.gov: -Individual Short Form http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/marketplace-app-short-form.pdf -Family http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/marketplace-app-standard.pdf -Individual without Financial Assistance http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/marketplace-app-no-financial-assistance.pdf    

Taxpayers With Foreign Accounts – Treasury Form 90-22.1 (FBAR)

Treasury Form 90-22.1 (FBAR) is required to be filed if you have an interest in foreign accounts totaling more than $10,000 at any time during the year. This form is filed separately from your income tax returns. For 2013, it must be e-filed and is due June 30, 2014. Please contact me if you would like to discuss further.

Real Estate Professionals

For Real Estate Professionals, in order to deduct rental losses in full, you are required to spend over half your working hours and at least 750 hours per year materially involved in real estate. Please contact me if you want to discuss further.

IRS First Time Abate Program

If you filed or paid your taxes late, you may be qualified to have the IRS abate your penalty under its First Time Abate Program. You must be tax-compliant for the past 3 years. Please contact me for further information.

Hurricane Sandy Victims

Some good news for Hurricane Sandy victims: The storm damage losses can be claimed on your 2011 or 2012 tax returns, whichever saves more money. Taxpayers have until October 15, 2013 to amend their 2011 returns to claim the storm damage losses. Unfortunately, NJ provides no tax benefit for the losses. Please contact me if you would like to discuss further.

Gifts By Check and Annual Exclusion

For gifts made by check, be sure the donee deposits it in 2012 if you want the money to count as a 2012 gift for gift tax purposes. Alternatively, deliver a certified check to the recipient this year, which will count as a 2012 gift. The 2012 annual gift exclusion is $13,000 per donee and for 2013, the annual gift tax exclusion is $14,000.

Flexible Spending Accounts

Check the balance in your flexible spending account. You must clean it out by December 31 if your employer still has not implemented the 2 1/2 month grace period that the IRS now permits. Otherwise, any money remaining in your account is forfeited. Also, for 2013, a $2,500 annual ceiling on heath flexible spending account payins goes into effect.

Fees Paid To Debt Resolution Company

I recently read an article from Kiplinger about debt resolution fees.  In this case, the debt resolution company saved a debtor $6,753.  The tax court allowed him to deduct the $2,343 fee paid to the debt resolution company subject to the 2% limitation for miscellaneous itemized deductions.

IRS First-Time Abate Program

Unter this IRS program, for many who file late or pay late, the IRS will OK a one-time waiver of the late payment and late filing penalties. The taxpayer must request relief and must be tax compliant for the past three years.

Roth Conversions

You have until 10/15/12 to undo a 2011 Roth conversion. If you filed your 2011 returns already, an amended return will have to be prepared to recover the taxes paid on the original conversion. Please contact me to find out more.

Disability and Worker’s Compensation

Worker’s compensation paid in lieu of Social Security benefits is taxable. An injured worker received both worker’s compensation and Social Security disability benefits. The worker’s compensation payments offset the social security benefits dollar for dollar. The worker’s compensation payment is treated just like other social security benefits: Up to 85% of the payments can be hit with income tax.

Severence Pay

Severence payments for laid-off employees aren’t subject to FICA taxes according to an Appeal Court decision (Quality Stores, 6th Cir.).  However, the IRS may appeal this decision to the Supreme Court.

Tax deduction for Tenant-Owners of Housing Co-Ops

Interesting tax break for Tenant-Owners of housing co-ops that do not own the land the building is on: Tenant-Owners can deduct their share of the building’s real estate taxes even though the land is leased from the owner and the Co-op constructed the building on leased land.

Rollover Rule and Inherited IRA

The 60 day rollover rule won’t apply if you inherit an IRA and the funds are first paid to you.  The funds have to be transferred directly to IRA.  Otherwise, the distribution is taxable.

S-Corporation Shareholder Loans and Basis

Only loans by shareholders to S-Corporations can increase their basis. Owners of S-Corporations can deduct losses only up to the amount of their investment in the company, including loans they make to the corporation. The debt must bona fide debt of the S corporation owed directly to the shareholder. Guarantors of loans to an S-Corporation do not get this break.

Federal Estate Taxes

Congress should act soon regarding estate taxes. After 2012 if congress doesn’t act, the rules before 2001 will go into effect and the current $5.12 million estate and gift tax exemption will fall to $1 million. The maximum tax rate would also increase 20 percentage points to 55%.

Charitable Contributions and substantiation

Having incomplete substantiation of donations when filing nixes a deduction for the contributions, according to the Tax Court. A couple made regular gifts of $250 or more to the church that they belonged to. However, the acknowledgment from the church failed to state that no goods or services were given for the donations. After the Service denied their write-off because of the faulty acknowledgment, they got a letter from the church saying they received no benefits for the contributions. But that came far too late. The deduction was properly denied because the donors didn’t have valid substantiation in hand before filing (Durden, TC Memo. 2012-140).

Rollovers from company plan and 10% penalty

Don’t roll over a company plan balance to an IRA and tap it before age 59½. The withdrawal can be nailed with a 10% penalty, an Appeals Court decides. A 56-year-old attorney left his law firm to return to school for an economics degree. He took the money that he had in his firm’s plan and rolled it over to a SEP IRA. The next year, he took out $240,000 from the IRA and used $40,000 to pay his tuit…ion. Because he tapped the IRA before he had reached age 59½, he owes the 10% penalty on the $200,000 payout that he didn’t use for education. The exception to the penalty for withdrawals made after leaving your job in the year you are age 55 or older is available only for payouts from company plans, not from IRAs

Possible reasons for IRS Audit

The following items may cause a potentially higher risk for audit

1.Making too much money

2. Failing to report all taxable income

3. Taking large charitable deductions

4. Claiming the home office deduction

5. Claiming rental losses

6. Deducting business meals, travel and entertainment

7. Claiming 100% business use of vehicle

8. Writing off a hobby loss

9. Running a cash business

10. Failing to report a foreign bank account

11. Engaging in currency transactions

12. Taking higher than average deduction

 

Please contact me to discuss further