I'm a New Jersey resident. I'm trying to figure out what medical costs can be deducted on my NJ State return.
So say on my W2 at Box 16 (State wages, tips, etc.) it says $70,000.00, and at Box 1 (Wages, tips, other comp) it says $63,000.00.
In the Gross Pay adjustment/calculation, I have
Less Other Cafe 125 - $3,500.00 (health, dental, vision, etc. insurance premiums that come out of my paycheck)
Less Cafe 125 HSA (Box 12 with Code 'W') - $3,500.00 (HSA contributions by me that come out of my paycheck)
For a total of $7,000 for the Cafe 125 (which would be the difference between the reported NJ State Wages in Box 16 less the reported Federal Wages in Box 1).
For my NJ State return, am I allowed to deduct or get credit for the $7,000.00 of Cafe 125 items (health insurance premiums + HSA employee contributions) plus whatever out-of-pocket medical bills incurred (doctor's visits, medications, etc)? I've made no distributions from the HSA account.
New Jersey Gross Income Tax law does not adopt the federal income tax treatment of
cafeteria plans as provided under I.R.C. Section 125. However, the New Jersey Gross Income Tax
law has a very limited exclusion for one particular type of cafeteria plan, not including any
salary-reduction plan. Since the New Jersey exclusion is limited, the value of cafeteria plan
benefits typically is includable in New Jersey taxable wages and subject to Gross Income
Tax withholding.
Sorry, could you break that down in simpler terms for me? I'm trying to wrap my mind around whether or not my Cafe 125 items -can- be included for a deduction/credit based on what's presented on my W2.
Wouldn't the insurance premiums that come out of my check be considered deductible in NJ though?
No, they are not deductible in New Jersey. This is why they are added back in for Box 16 on your W2.
If I can't deduct the insurance premiums and HSA contributions, could I designate them as medical expenses?