topic New Jersey Pension Exclusion-Foreign Pension in Retirement tax questions

New Jersey Pension Exclusion-Foreign Pension

ParkNYC — Sat, 11 Jan 2025 20:33:47 GMT

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,

Re: New Jersey Pension Exclusion-Foreign Pension

pk — Sat, 11 Jan 2025 21:16:51 GMT

@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 ?

Re: New Jersey Pension Exclusion-Foreign Pension

fanfare — Sun, 12 Jan 2025 05:43:00 GMT

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

Re: New Jersey Pension Exclusion-Foreign Pension

ParkNYC — Sun, 12 Jan 2025 19:05:41 GMT

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

Re: New Jersey Pension Exclusion-Foreign Pension

pk — Sun, 12 Jan 2025 23:27:29 GMT

@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 ).

Re: New Jersey Pension Exclusion-Foreign Pension

ParkNYC — Mon, 13 Jan 2025 16:45:57 GMT

New Jersey exclusion, Anyone???

Re: New Jersey Pension Exclusion-Foreign Pension

BillM223 — Wed, 15 Jan 2025 19:23:37 GMT

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.

Re: New Jersey Pension Exclusion-Foreign Pension

ParkNYC — Thu, 16 Jan 2025 01:48:21 GMT

Japan

@BillM223

Re: New Jersey Pension Exclusion-Foreign Pension

BillM223 — Thu, 16 Jan 2025 18:21:59 GMT

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.

Re: New Jersey Pension Exclusion-Foreign Pension

ParkNYC — Sat, 18 Jan 2025 01:57:34 GMT

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.

Re: New Jersey Pension Exclusion-Foreign Pension

DaveF1006 — Mon, 20 Jan 2025 17:13:20 GMT

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

Re: New Jersey Pension Exclusion-Foreign Pension

fanfare — Mon, 20 Jan 2025 19:00:01 GMT

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

Re: New Jersey Pension Exclusion-Foreign Pension

ParkNYC — Mon, 27 Jan 2025 18:52:53 GMT

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,

Re: New Jersey Pension Exclusion-Foreign Pension

fanfare — Tue, 28 Jan 2025 13:36:26 GMT

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

Re: New Jersey Pension Exclusion-Foreign Pension

lc2020 — Wed, 21 May 2025 15:06:36 GMT

Is there a definite answer to the question? Does NJ allow foreign pension exclusion? In my case, the pension is from China

Thanks.

Re: New Jersey Pension Exclusion-Foreign Pension

pk — Wed, 21 May 2025 17:44:46 GMT

@lc2020 , as you have undoubtedly seen from this thread:

(a) there is general agreement that for federal purposes, existing and in-effect tax treaty between US and the other country ( China in your particular case ) dictates if the US can tax the foreign pension ( based on type of pension and past employment );

(b) NJ statutes do not clearly state whether exclusion eligibility ( i.e. pension eligible for exclusion ) extends to "foreign" pension -- as stated by @fanfare " even the DOR-NJ may not have a clear answer on this ". IMHO, foreign pensions are unlikely to have been considered while creating the statute.

Thus in the absence of clear guidance, it becomes a question of (a) seeking guidance from NJ-DOR or (b) just assume that "foreign " pension is the same as pension from any domestic source and thus eligible for exclusion.

I did go back and look at both NJ-DOR instructions / comments on pension exclusion eligibility and China Tax treaty language ( article 17 and 18 ), --- clearly NJ instructions are addressing domestic pension schemes. They are silent on foreign sourced private pension. So my above position/ suggestion stands.