Sold a home in NJ in 2016 and at the closing, NJ withheld 2% $8,600 total from the sale as an "exit tax", thinking that the sale would be subject to a Capital Gain. The house was in Joint Ownership and between both of us, we were completely exempt from Capital Gains at the Federal Level and also at NJ when we filed NJ Non Resident return to get back our $8,600 which was improperly withheld and which NJ did return to us. Now NJ has issued a 1099-G to each of us. My question is wether this is reportable on the Federal Tax Return which we will file in April 2018 .. It is my belief that it should not be, but want to be sure, since NJ would probably have sent the 1099-G to the Feds (IRS) as well. .. Thank you
