Can you deduct the insurance premiums that are deducted from your pay check on the NJ State tax form?

[rjs]

The health insurance premiums that are deducted from your pay can be added to your medical expenses for the NJ tax return. While they are usually deducted pre-tax for federal tax, they are after-tax for NJ. On the screen where you enter medical expenses in the New Jersey interview, there is a separate box for "medical insurance premiums included in your New Jersey wages but not in your federal wages on your W-2, and not deducted on Federal Schedule A." The premiums that you enter in that box will be added to the other medical expenses for your NJ tax return. The amount of your deduction on the NJ tax return is your total medical expenses minus 2% of your New Jersey gross income. You enter the full amount of the expenses. TurboTax will do the subtraction.

[steph508]

can you enter your premiums there if you didn't pay them out of your paycheck?

[rjs]

Yes, you can enter medical insurance premiums that you paid yourself, not taken out of your paycheck, as long as they are not already included in the amount that was transferred from your federal tax return. It doesn't matter which box you enter them in. The two boxes on the NJ medical expenses screen get added together on your tax return. The separate box for premiums deducted from your pay is there to remind you include them.

[stlucia95]

Hello,

I've only ever taken the premiums for my wife and daughter who a have a policy thru the exchange but we do not qualify for a credit.  Is this allowed? 

And if I'm hearing you correctly I can deduct the amount show on my 1095-A that I received from my payroll provider towards my expenses.  Correct?

[shikotax]

Does it also apply to Insurance Premiums taken from my paycheck via Cafeteria plan?
The premiums were not taxed by Federal gov., but they were taxed by State of NJ, so on W-2 they are part of NJ wages.
If this is correct and Health Insurance Premiums can be deducted as medical expenses, then all these years I was losing few hundred dollars of tax refunds...
I asked couple of my friends, and they also did not know they could deduct health insurance premiums.
One would expect TurboTax at least would notice that I paid insurance, but the field for it shows zero and I would get some warning... no prompt, nothing?!
Sure, there is a box on medical expenses screen, but it is not clear where to get those numbers, b/c it is not on W-2 as a separate amount, and it needs user to calculate it, so you need to know "how"... and most important – "you really can do it".
I think this is a big flaw in the NJ tax preparations in TurboTax application design!
Why do I need TurboTax if I need to hire a tax adviser to double-check my return…?

[rjs]

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@shikotax wrote:

Does it also apply to Insurance Premiums taken from my paycheck via Cafeteria plan?

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Yes, the portion of your cafeteria plan deduction that is for medical insurance premiums can be included in the medical expenses on your New Jersey tax return.

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@shikotax wrote:

One would expect TurboTax at least would notice that I paid insurance

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TurboTax has no way of knowing that medical insurance premiums were deducted from your pay. There is no way for it to "notice" that.

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@shikotax wrote:

it is not on W-2 as a separate amount

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That is precisely why TurboTax is not able to determine that medical insurance premiums were deducted from your pay. There is nothing on the W-2 that indicates it.

The medical expenses screen in TurboTax for New Jersey says to enter "medical insurance premiums included in your New Jersey wages but not in your federal wages." That very clearly tells you that you should enter it. If you don't know the amount, that instruction in TurboTax should certainly trigger you to ask your payroll department to tell you the amount. Again, there is no way for TurboTax to calculate the amount, or to even know that it exists.

[ravirocks86]

If my state wage is higher than federal wage, then software should be able to figure out that my medical premiums are included in state wage?

[BillM223]

There are a number of reasons why your state wages might be higher than your federal wages. Besides the case of premiums paid for health insurance, in New Jersey, HSA contributions are excluded from federal income but not state income, making the state income higher.

Also, there are a number of retirement plan contributions that may be deductible on the federal return that are not deductible in New Jersey (note: the most common one, the 401(k), is deductible on both returns).

As rjs notes, it is not possible for TurboTax to positively identify why the state wage is higher.

[rjs]

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@ravirocks86 wrote:

If my state wage is higher than federal wage, then software should be able to figure out that my medical premiums are included in state wage?

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@ravirocks86  There are a lot of things that can make the NJ state wages higher than federal wages. The software cannot just assume that it's medical insurance. You have to use your pay stubs, a statement attached to your W-2, or other information from your employer to determine how much, if any, is medical insurance premiums. The tax software cannot figure it out from your W-2 because the necessary information simply isn't there.

[ghykko]

What if the medical expense indicated is the same on my Federal W-2 and on the NJ State W-2? Can I still claim that amount for NJ state medical expenses?

To make things a bit more confusing for me, I work in NY and live in NJ. I went through four different companies so now I have four W-2s, but only 2 of them have income tax for NJ. Why isn't it consistent across all companies?

[livelifeandbehappy91]

Is this the case for dental premiums and dependent care FSA deductions as well? (deducted from federal but included as income in New Jersey?)

[DMarkM1]

Yes, the contributions to cafeteria and employer sponsored FSAs will be NJ income.  Yes, you can enter medical and dental expenses as a deduction.  Whatever FSA funds were use to pay medical/dental expenses for the taxpayer, spouse and dependents on the tax return can be entered as medical deductions.  

Here is a NJ reference.

[shikotax]

At least, Turbotax should detect discrepancy between Fed and State gross incomes and give users some warning to double-check it, otherwise it leaves this for user to remember about  different treatment on W-2.
So, then user has to go and calculate difference manually... 
IMHO, a good software interface should allow you to do all calc-s and check-s within that interface.

[livelifeandbehappy91]

Is this also the case for a dependent care FSA? I saw a reference that showed dependent care FSA deductions from NJ income here: https://www.nj.gov/treasury/pensions/documents/taxsave/fsa-flier.pdf