New Jersey Pension Exclusion-Foreign Pension

[ParkNYC]

Hi there, I tried to get some answers on state tax forums, but no replies. Maybe here someone knows if foreign pensions (retirement) are eligible for NJ pension exclusion on1040 tax return.  In NY we were able to exclude up to $20,00. In NJ, as far as I know, we should be able to exclude 100% of retirement (pension) if our gross income is below 150K and one of us is 62 or older, but couldn't find any info regarding foreign retirement pension though.

Thank you,

[pk]

@ParkNYC ,

(a) For NJ  pension exclusion, please visit  this site -->  https://www.irs.gov/pub/irs-pdf/p527.pdf

(b) by the way on looking over  the up to $20,000 exclusion allowed by NY,  the eligible pensions are  NY State pension, or local govt. pensions or federal pension including Social Security.  This does not cover foreign pension.   So you may have to read-up on the subject  and amend your NY filings ( in the worst case )

You foreign pension is from which country ?   If US has a tax treaty with that country, there may be   rules as to whom ca tax that income.

Is there more I can do for you ?

[fanfare]

To get the pension exclusion, your pension must appear on NJ-1040 Line 20a, and you and/or your spouse meet the other eligibility conditions of age and earnings (Line 27).

@ParkNYC 

[ParkNYC]

You are wrong, please do not post misleading information here and tell people to amend properly filed tax returns. New York State allows to exclude foreign pensions up to 20K: https://www.tax.ny.gov/pdf/volunteer/ty2018/co-60.pdf

I'm still looking for information about NJ exclusions. Anyone?

Thank you,

@pk 

[pk]

@ParkNYC     On re-reading my earlier response, you are correct and I was wrong -- forgive. 

At the same time, my whole intent  was not to get you to  amend your  earlier NYS returns but to  bring to  light that depending on the type of foreign pension, there may be  treaty considerations.

NYS Statute 612 (c) ( 3-a )  does not  ( clearly or otherwise) address  the foreign  pension  ( especially foreign public pensions).  I agree  though that in the absence of clear definition, one is perhaps right in assuming  that NYS indeed allows  US$20,000  exclusion  of pension/annuity distribution per filer ( meeting the eligibility requirements ).

[ParkNYC]

New Jersey exclusion, Anyone???

[BillM223]

I do not see any reference in New Jersey where foreign pensions are treated differently than domestic pensions.

pk has a point about treaty considerations, but since we don't know which country is the source of this foreign pension, we can't say anything more.

[ParkNYC]

Japan

@BillM223 

[BillM223]

It appears to me that the US-Japan Tax Treaty says that your pension is taxable in the US IF you are not Japanese nationals (we have no idea if you are US or Japanese citizens).

Please see Articles 17 and 18 in the US-Japan Income Tax Treaty of 2003.

One could assume that if your foreign pension is taxable in the US, then the exclusion rules in New Jersey should apply to it.

Please note that reading Tax Treaties is a specialized science and I do not have nearly as much experience in this as @pk and I encourage  you to seek an answer from @pk as a follow up.

[ParkNYC]

Thanks for your time. I'll probably call the NJ tax department for clarification.

I'm 90% sure that we should be able to to apply that exclusion in NJ.

[DaveF1006]

Yes, in researching numerous websites, NJ does not specifically mention Foreign Pensions being excluded from this exemption. Chances are, The NJ Dept of Taxation may not have a clear answer either.

@ParkNYC 

[fanfare]

You will get the pension exclusion when your pension appears on NJ-1040 Line 20a, and you and/or your spouse meet the other eligibility conditions of age and earnings (Line 27).

@ParkNYC 

[ParkNYC]

Thank you @fanfare. Yes, it appears that the program allocated 10 months (time while in NJ) portion of my foreign pension and applied my pension exclusion. I still have some questions regarding my NJ income so I'll try to contact NJ Tax dept. to clarify. Also, would you know when I can deduct my profit and loss from my NY S corporation since I already reported this on my federal and NY part year resident return. It's a small amount, but since I paid it to NY state (I'm obligated because i do business in NY not NJ) I don't want to be double taxed. The tax credit worksheet for line 44 seems to work on tax paid not amount paid. Thank you,

[fanfare]

COJ - credit for tax paid elsewhere cannot exceed your NJ tax.