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Level 2

How does the Homestead Benefit act work for NJ residents? How do I apply this benefit to turbo tax?

How does the Homestead Benefit act work for NJ residents?  How do I apply this benefit to turbo tax?

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Level 1

How does the Homestead Benefit act work for NJ residents? How do I apply this benefit to turbo tax?

The NJ Homestead Benefit reduces the taxes that you are billed. Because the benefit is no longer handled as a rebate, it is no longer accounted for on your federal (or NJ) tax returns.

When you report your property taxes paid, you already account for this benefit. You would only have over-deducted if you ignored the property taxes paid when taking a deduction, and instead used the rate from your green card or the yearly rate based on an assessment.

So, if your property taxes in 2017 were $8000 and you received a Homestead Credit that year of $150, you would only have paid $7850. You deduct $7850, and you do not recover the $150 as income.

This is different than how it used to be handled, as they used to issue a check. If you account for the benefit as income now, you will be paying taxes on it twice-

Once, as income. Twice, because the rebate reduces the taxes you pay in the current year.