Preparer Updates

Special Topic: Federal and NJ Property Taxes - Minor Update

Special Topic: NJ 1040X TSO Screens - New

Special Topic: Election Workers NJ Version - Major update. To be used instead of NTTC version.

Special Topic: NJ Resident with NY Income Screening Sheet - Minor update - add Box 12, Code E to in-scope list

The Special Topic: NJ Resident with NY Income - Major update.

This is a mojor rewrite. Do not use the old version

See also: Screening Sheet

This updated has been superceded by: Special Topics Document: "NJ Supplement for Election Workers" (TY22)

From NJ Division of Taxation:

We have begun mailing 2022 Senior Freeze applications. Please allow until mid-March for delivery before contacting us. New for 2022, eligible applicants are able to file their PTR-1 or PTR-2 applications online. [A link File your PTR Online has been added to the Preparer page / Middle column / NJ Division of Taxation Links section] The deadline for 2022 applications is October 31, 2023.
Senior Freeze Information

2022 Senior Freeze forms and instructions are now available online. Prior year forms are available for those who need to catch up on their filings.
Senior Freeze Forms

The IRS provided details today (Friday, 01-10-2023) clarifying the federal tax status of special payments made by the states in 2022. Based on this guidance, NJ taxpayers will not need to report any special payments they received on their 2022 tax returns (i.e. – the payments are not taxable and not considered recoveries)

Examples of special payments that do not need to be reported:
- The "Middle Class Tax Rebate" from TY2021
- The "ITIN Holders Direct Assistance Program" from TY2022

Note: PTR and HB payments are not "special" - they still need to be treated as recoveries on the federal return.

See IRS News Release for more details.

A number of districts have reported seeing senior citizen taxpayers that only have minimal election worker income (usually $600) and Social Security. These clients are not eligible for the Federal EIC based on their election worker pay because they are over the TY2022 Federal EIC maximum age limit of 64 for taxpayers with no qualifying children. However, they are eligible for a $224 NJ EITC.

Here is how that works (See NJ-1040 instructions on page 41):

• While the TY2022 IRS rules have reverted to a maximum age of under 65 for EIC with no qualifying children, NJ rules just say a taxpayer must be 18+. So, the taxpayer can receive a NJ EITC even if they cannot receive a Federal EIC due to age limits.
• NJ EITC eligibility requirements state "You met all Federal EIC requirements except the age requirement." As long as the taxpayer meets the Federal requirements except for the age limit, it does not matter what NJ income they have (even if zero NJ taxable income).
  • Note: This is our current understanding of the rules. We are awaiting final confirmation from the NJ regulatory group, but they will only commit to an answer within 30 days.
• The NJ EITC is normally 40% of the Federal EIC. Since there is no Federal EIC amount in this situation, NJ grants 40% of the maximum Federal EIC amount for a taxpayer with no qualifying children ($224).

A similar NJ EITC situation could also occur in other circumstances, such as disability income.

We have redone the Special Topics document "Medicaid Waiver Payments - NJ," and created a Worksheet to go with it. You should use those instead of the NTTC document on the same topic. Our document concentrates on the MWP that we are seeing in NJ. Remember, for MWP, the taxpayer can choose to have their W-2 income taxable or nontaxable. They can also choose whether to include the income as earned income or not. Our document tells you how to process the W-2s we are seeing to determine the best tax option for your taxpayer. It is a messy, complicated topic, but if you follow the instructions carefully, you should end up with the correct results.

As mentioned in TY2022 Instructor Worksheet #5, implementation of the new IRS reporting thresholds for Form 1099-K for third-party settlement organizations has been delayed. 2022 will now be considered a transition year. However, some issuers had already implemented these new thresholds before the IRS issued the delay. Therefore, some of our taxpayers are bringing in these 1099-Ks. Please be sure to consult the NTTC document “Form 1099-K Payments” on TP4F for instructions on how to handle these forms.

Bob Sherman has advised that we should do Friends and Family returns in our TSO production system. Remember to have each return quality reviewed.

The final (known) changes to the NJ Checklist have been made so the DRAFT watermark has been removed. The NJ Checklist Job Aid has also been updated.

Now that training is finished, the TY2021 sections for Work Aids, Special Topics, etc. have been removed. The checkboxes for picking which years to display have also been removed.

You can find prior versions of things on the TY2021 TaxPrep4Free website (see upper right corner of the page header where it says "Click for TY2021")

The TSO bug that was not calculating the NJ EITC correctly for taxpayers 65 or older with no qualifying children has now been fixed. This bug was impacting the TY2022 version of the Berkley What's New problem. As of this afternoon, the refund monitor numbers in the scenario have been updated. The printed return was updated a few days ago.

Since the deadline for the new ANCHOR program has been extended until 2/28/2023, we have posted a link to the application on the TP4F Preparer Page in the NJ Division of Taxation section. (Thanks for the suggestion, John Gibson). Please encourage the taxpayers you serve in February to apply if they have not already done so. Remember, both renters and homeowners may be eligible.

The payments for the ANCHOR benefit will be via check or direct deposit. They will not be paid as a credit on the property tax bill as the Homestead Benefit was. Therefore, the question on the TSO Property Tax Deduction/Credit screen that asks, "Are you eligible and file for a homestead benefit application to receive the property tax credit with the homestead benefit?" is no longer needed. Until TSO removes that question, always answer this question NO. If you do so, homeowners who are 65 or older or blind/disabled and under the filing threshold will receive their $50 property tax credit on their tax return.

The NJ Property Tax Flowchart Tool and the NJ Property Tax Decision Tree document have been updated to reflect the fact that this TSO question no longer applies.

When you used the NJ Tax Refund Worksheet tool on TP4F to determine the taxable amount of the PTR and HB, you were asked "Did the taxpayer itemize in 2021 (for the PTR)?" and "Did the taxpayer itemize in 2018 (for the HB)?" You were given 3 answers in the drop-down menus: Yes, No, or Unsure. If you chose Unsure, the tool made the conservative assumption that the taxpayer did itemize. We have now eliminated the Unsure option. Please discuss this question with your taxpayer. Explain the tax implications if they did or did not itemize. Jointly determine the best way to answer the questions.

The TY2022 NJ-1040 no longer requires the block/lot/qualifier and county/municipality information for homeowners claiming the property tax deduction/credit. So we have removed those lines from the NJ Checklist in the Credits section. Note that the county/municipality info of the current residence is still needed in the NJ Basic Information section.

The NJ Checklist Job Aid has been updated to explain all the new lines on the NJ Checklist for TY2022.

A new pre-formatted scratch pad has been added on TP4F to help you calculate the medical insurance premiums amount to claim on Schedule A for taxpayers who have a net premium tax credit or an excess advance premium tax credit repayment from a Marketplace policy reconciliation. (Again, thanks to John Gibson's suggestion.)

We have posted a new NTTC document on TP4F in the TY2022 NTTC Documents section. It is called "Election Workers." (See NTTC Document: "Election Workers") You should pay particular attention to how to enter election worker compensation on the Federal return if the income is reported on a 1099-MISC in Box 3. A TSO workaround is required. Please review this process carefully, as it is not intuitive.

You may remember that my missive #5 issued on 1/8/2023 already explained that we also had to add two new lines on the NJ Checklist to reflect that election worker income is no longer taxable on the NJ return.

A printable version of the NJ Tax Topics Tool has now been added to TP4F. We strongly suggest that counselors use the searchable online version, but we know that some people still prefer paper.

In TSO Production, the system now displays notifications on the Welcome screen. You may need to click on the X in the upper right corner to exit from these notifications before you can see the "Start a New 2022 Tax Return" and "Client Search" lines that you need.

Release 2 of the NTTC Scope Manual is now posted on the TP4F Preparer page under the TY2022 NTTC Documents section. You can see the new changes on page iv. They are labelled R2. On that same page, you might want to read an interesting new section entitled, "Can high income cause a return to be out of scope?"