Tax Tips
New Home Buyer Credit
- First time homebuyers and certain existing homeowners can qualify for a tax credit if a personal residence is purchased prior to May 1, 2010 and closed prior to July 1, 2010.
Stock Market:
- In a period of declining stock prices you may be able to reduce your taxable income by moving out of unfavorable investments and shift to investments you are more comfortable with. Remember a tax loss only occurs upon the sale of the security. Recognized stock losses are used to offset capital gains. Excess capital losses can be used to offset up to $3,000 of ordinary income. If the loss exceeds $3,000 the balance of the loss is carried forward to future years. Because a capital loss is used too offset ordinary income it is advantageous to recognize a capital loss in one year and defer long term gains to the following year.
- You can write off the cost of a worthless security as a capital loss. In order to take the loss you must have evidence that the security is worthless, company has liquidated or gone bankrupt.
General Tips:
- Qualified Tuition Programs (529b plans) – earnings from these accounts are
tax-free. This represents an opportunity to accumulate funds for children and grandchildren's
college education tax-free. Gifts to 529b accounts can exceed the regular annual
gift maximum of $13,000. This represents a manner to reduce potential estate taxes.
- The IRS requires a Social Security number for all dependents. Without it the
IRS can deny personal exemption, child care or dependent care credit.
- Premiums paid
or accrued for qualified mortgage insurance are deductible as qualified
residence interest. The insurance must be carried on acquisition indebtedness for
a qualified residence. A "qualified residence" is the principal residence and one
other residence that is not treated as business property.
- IRA and Keogh Distributions. Minimum distributions are generally required when
you are seventy and one-half. The first distribution may be delayed until April
1 of the year following the year you reach 70 and one-half. In subsequent years
the distribution must be made an annual basis. Careful planning can determine the
most advantageous year to take the first distribution.
IRA Frequently Asked Questions:
- Roth IRA's are non deductible but grow tax free.
- Roth IRA's can used in college funding planning.
- Traditional IRA's are deductible but distributions are taxable.
Business Tax Tips
- Utilize Section 179,expenseing of business asset purchases, $250,000 in 2009 and $134,000 in 2010.
- Start-up costs- If you launched your business in 2007
and you incurred expenses before the business actually began operating (start-up
costs), you may be able to deduct these expenses. As long as the business is up
and running by the end of 2007, you can elect to currently deduct up to $5,000 of
start-up expenses. Once start-up costs exceed $50,000 the $5,000 limit is reduced
dollar for dollar. The remainder of the costs must be deducted ratably over a 180-month
period.
- The Disabled Access Tax Credit allows $ 5000 of expenditures annually for purchase of equipment to make your building more accessible to the handicapped.
- Section 190 expenditures; immediate write-off of the first $15,000 of expenditures incurred to remove architectural or transportation barriers to provide services to the handicapped or elderly.
NJ Return Status
How do I check the status of my New Jersey income tax refund? Currently there is no online inquiry system for income tax refunds. You can get information on the status of your income tax refund for the current year by calling the Automated Refund Inquiry System from a Touch-tone phone at: 1-800-323-4400 (within NJ, NY, PA, DE, and MD) or 609-826-4400 (anywhere). This service is available 7 days a week (hours may vary). You will need the social security number that was listed first on your return and the amount of the refund requested when making this call.
If you filed a paper return, information on the status of your refund will not be available for at least 6-8 weeks from the time the return was mailed. Paper returns are not logged in as they are received. Division of Taxation personnel cannot verify receipt of your return until processing has begun, and the return appears in our computer system.
The automated phone system can tell you if and when your refund was mailed and when you should receive it. The system also allows you to begin the procedure to trace a lost refund check. If you filed your return electronically and requested direct deposit for your refund, the system can tell you the date it was deposited into your bank account.
You can also perform an online search to determine if your refund check was returned to the Division of Taxation by the U.S. Postal Service because of an invalid mailing address. If you discover that your check was returned, you can submit a claim form online to have it reissued.
If you do not have access to a Touch-tone phone, or if you need information about the status of a prior-year refund, call the Customer Service Center at 609-292-6400 during normal business hours to speak to a Division of Taxation representative.