topic NJ Pension Exclusion and Estimated Taxes in State tax filing

NJ Pension Exclusion and Estimated Taxes

Reggieng — Mon, 05 Apr 2021 16:47:38 GMT

This issue relates to the calculation of estimated taxes for New Jersey and the NJ Pension Exclusion. For married filing jointly, the pension exclusion only applies for a total household income below $100,000. The exclusion immediately goes to zero for incomes over $100,000, even by one dollar. The NJ estimated tax calculation in TurboTax does not seem to handle this correctly. When a total income of over $100,000 is entered in TurboTax (Line 1 of the Form), the pension exclusion (Line 2) stills shows $100,000 and the gross income (line 3) is incorrectly reduced by $100,000. This would result in a significant underpayment estimated taxes and probable penalties. I also tried some other larger income values ($200k, $300k and greater) and the program continues to reduce each total income by the $100,000 exclusion, even though pension exclusion clearly does not apply. Am I missing something?

Re: NJ Pension Exclusion and Estimated Taxes

SweetieJean — Mon, 05 Apr 2021 16:53:02 GMT

I seem to recall that this was an issue a year or two ago as well. I am flagging your post for the Moderator.

Re: NJ Pension Exclusion and Estimated Taxes

Reggieng — Mon, 17 May 2021 19:57:34 GMT

hank you for your reply and flagging of the question to the Moderator. Unfortunately, there appears to be no action taken on the part of TurboTax to respond with either a resolution or an explanation of why there is not a problem. Hopefully, someone is looking at this and will be providing soon a response one way or the other.

PS: I expect that if there is an error in TurboTax and a taxpayer is penalized for underpaying estimated taxes that such underpayment and any penalties are covered by TurboTax's 100% Correct Guarantee.

Re: NJ Pension Exclusion and Estimated Taxes

Jim from NJ — Wed, 16 Feb 2022 19:19:25 GMT

I am having the same problem with Turbo Tax and its trying to apply an exclusion to my pension income when I am not entitled to it. This is greatly reducing my tax burden and I will be subject to audit and fine if I submit my taxes without correcting this situation. I need Turbo Tax to correct their software.

Re: NJ Pension Exclusion and Estimated Taxes

Jim from NJ — Wed, 16 Feb 2022 22:30:28 GMT

Has anything been done?

Re: NJ Pension Exclusion and Estimated Taxes

Jim from NJ — Wed, 06 Apr 2022 18:04:54 GMT

I read somewhere that NJ raised its pension exclusion from $100,000 to $150,000. That will certainly affect you.

Re: NJ Pension Exclusion and Estimated Taxes

BillM223 — Wed, 06 Apr 2022 19:53:55 GMT

Jim, you are correct that there have been changes for 2021. Both of you, please review page 19 for the table on determining the pension exclusions in the NJ instructions, to see if this makes any difference.

Also, were both of you annualizing your NJ income?

@Reggieng

@Jim from NJ