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chrobotj
New Member

Section=StateTaxes,MedicalExpenses.Should I put amount from W-2_Box14_Other=Sec.125 in "NJ MedicalInsuracncePremiumsIncludedInYourNJwagesButNotInYourFederalWages..."?

FYI: Field="New Jersey Medical Insuracnce Premiums Included In Your New Jersey wages but not in your federal wages on your W-2 and not deducted on federal Schedule A". Wage in W-2 Box1 is less than in W-2 Box 18.
4 Replies
ChristinaS
New Member

Section=StateTaxes,MedicalExpenses.Should I put amount from W-2_Box14_Other=Sec.125 in "NJ MedicalInsuracncePremiumsIncludedInYourNJwagesButNotInYourFederalWages..."?

You deduct your Section 125 medical premiums on your NJ return only, because NJ taxes you on them.

Enter the premiums on your NJ return. Medical expenses over 2% of your income are deductible on the NJ return, so most people see a small benefit.

You don't deduct Section 125 medical on your federal return, cause the federal government does not tax you on them.

peterpaulmary1
Level 2

Section=StateTaxes,MedicalExpenses.Should I put amount from W-2_Box14_Other=Sec.125 in "NJ MedicalInsuracncePremiumsIncludedInYourNJwagesButNotInYourFederalWages..."?

Thanks for the info on deducting Sec 125 medical premiums on NJ return. Started to compare the hughe difference in Fed wages vs NJ wages and realized Medical insurance is being taxed on the NJ return.

Quite a scam by the NJ tax folks and poor programming by Turbotax....going back to review a just submitted NJ return....

 

Thanks 

BillM223
Expert Alumni

Section=StateTaxes,MedicalExpenses.Should I put amount from W-2_Box14_Other=Sec.125 in "NJ MedicalInsuracncePremiumsIncludedInYourNJwagesButNotInYourFederalWages..."?

"Quite a scam by the NJ tax folks and poor programming by Turbotax"

 

No and no.

 

The elected NJ state legislature decided to handle medical expenses differently than most states and the Feds. While on your federal return, the health insurance premiums paid by you and your employer are excluded from Wages (and therefore are non-taxable), any medical expenses that you do have are deductible only if they exceed 7.5% of your Adjusted Gross Income - a very high bar for most taxpayers.

 

While NJ does tax you on the amounts that your employer spends for your health insurance premiums, NJ also allows you to deduct any unreimbursed medical expenses over only 2% of your state AGI - a much lower bar.

 

I suspect that for taxpayers with a lot of unreimbursed medical expenses, then the NJ way works out much better for them.

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peterpaulmary1
Level 2

Section=StateTaxes,MedicalExpenses.Should I put amount from W-2_Box14_Other=Sec.125 in "NJ MedicalInsuracncePremiumsIncludedInYourNJwagesButNotInYourFederalWages..."?

Hello

Will say correct on the Federal explanation of 7.5% above gross income and fortunately haven't had to use this deduction.

Disagree with your response on the NJ Medical deduction.

While completing taxes for a relative noticed that the INSURANCE PREMIUMS (Box 14 Sec 125)  paid by the EMPLOYEE are included in the State Wages Box 16 and taxable at the state level. Medical insurance paid by the EMPLOYER are listed in Box 12 DD and are NOT included in the state or federal wages.

If you answer YES to medical expenses while using the deductions section of a NJ Return you are eventually asked to input Medical Insurance Premiums paid by the employee. Easy to skip if someone is healthy and had no medical issues.  This resulted in a reduction of around $100 in NJ taxes.

With the premiums almost approaching $4000 in a year the Medical Deduction worksheet shows a Medical deduction of around $2000 resulting in a tax reduction of $100.

IN effect NJ does tax a portion of the Premiums paid by the employee.

Regards, Paul

 

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