My wife and I both retired from NJ public school teaching this past June 30, 2022, and received our first pension check on August 1, 2022,
The amount we receive in pension for the next 36 months (Aug 1, 2022 to Jul 30, 2025) starting with our first check, will be slightly greater than our original contribution, so according to Worksheet A we are allowed to use the 3-year rule in excluding our pensions from NJ Taxes until we recoup our contributions.
Here's our question: We just want to make sure that we're interpreting the 3-year rule correctly; since we retired in the middle of the year, the 36 months that it will take to recoup our original contributions, will bridge 4 years of NJ-1040 tax returns, since this 1st year will only represent a portion of our annual pension amount, and the last year will only have a portion of the entire annual pension that will be allowed to be excluded. IS THIS CORRECT: that since the 36 months to recoup our contributions bridges 4 years of tax returns, that we are still allowed to use the 3-year rule? Thank you very much.
PS: I was able to finally get a call through the NJ Div of Taxation Customer Service line and ask them this same question, but since they had to look up what I was talking about, and put me on hold, before they would answer me, I thought I would try and corroborate their answer by asking the TurboTax Community. Thanks again.
