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mmelias03
New Member

Does anyone know where to enter the ANCHOR benefit amount? This is a real estate tax benefit paid out to NJ homeowners. Thank you.

 
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rjs
Level 15
Level 15

Does anyone know where to enter the ANCHOR benefit amount? This is a real estate tax benefit paid out to NJ homeowners. Thank you.

You may have received two ANCHOR benefits in 2023, one around the end of March or early April, and the other around the end of October. The first one was a refund of part of your 2019 real estate tax. The second one was a refund of part of your 2020 real estate tax.


If you did not claim itemized deductions on your 2019 or 2020 federal tax return you do not enter the ANCHOR benefit at all in your 2023 federal tax return. It is not taxable income and it does not affect your income tax.


If you did itemize deductions for the year that the ANCHOR benefit is for, and you claimed an itemized deduction for real estate tax on Schedule A line 5b, you might have to report part or all of the ANCHOR benefit as income on your 2023 federal tax return because it's a refund of an amount that you deducted in the earlier year. Calculating the amount that you have to report as income, if any, is a little complicated and unfortunately TurboTax will not do the calculation for you. The basic principle is that you only have to report as income the amount for which the deduction actually gave you a tax benefit in 2019 or 2020. For example, if your total deduction for state and local taxes on Schedule A line 5d exceeded the $10,000 or $5,000 cap on line 5e by more than that amount of the ANCHOR benefit for that year, then you did not get any tax benefit from deducting the ANCHOR amount.


The rules for calculating the taxable amount that you have to report are in IRS Publication 525, pages 24 - 29, beginning with "Recoveries" in the right-hand column on page 22. You will need some information from your 2019 or 2020 federal tax return. After you calculate the taxable amount that you have to report as income, you enter it in TurboTax. In the Search box type "reimbursed deductions" (without the quotes), then click the link that says "Jump to reimbursed deductions."


In any case, you do not enter the ANCHOR benefit in your New Jersey tax return. If you are claiming the property tax deduction or credit, when it asks the amount of real estate tax that you paid, enter the full amount that you paid. Do not subtract the ANCHOR benefit.

 

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