My NJ Tax return not picking property tax deduction but instead picking a credit

[MaryK4]

For the New Jersey state return, it is a credit if you qualify, there is no deduction on the state return.

[jigarym]

I have claimed deduction for many years. It is either deduction or credit and I want to use it as a deduction. 

[MaryK4]

Homeowners and tenants who pay property taxes, on a principal residence in New Jersey, either directly or through rent, may qualify for either a deduction or a refundable credit when filing an Income Tax return.

The property tax deduction reduces your taxable income. You can deduct your property taxes paid or $15,000, whichever is less. 

Go back to the New Jersey Tax summary page and Update the Taxes and Credits.  You will be able to enter the information in this section to get the deduction.

@jigarym

[jigarym]

Thanks !

I did it few times and it always chooses the "Credit"

[VictoriaD75]

Credits are typically more valuable than deductions. Credits reduce your tax liability dollar-for-dollar while deductions reduce income prior to calculating the tax liability. TurboTax will choose the most valuable to the taxpayer. We cannot see your return in this forum, but this may be the case. You can review your return to determine the impact.

• From the menu on the left, click on Tax Tools
• Click on Tools
• Choose View Tax Summary
• Again, from menu on the left, you can preview your NJ return
• Scroll through the return to determine the impact of the credit

[smtaxer]

There is a definite DEFECT with turbo tax in calculating the tax savings between NJ property tax deduction and property credit of $50.

I have tried this a few times.

For example,

My property tax is 5000. My marginal NJ tax rate is 6.37%

So the effective reduction of tax is property tax deduction is $318

However, it always picks tax credit of $50.

Turbo tax, pls fix this bug for NJ property tax deduction vs property tax credit!!

Also, if user enters  2 or more residences over the tax year, one as rental and one as home, Turbotax does NOT sum the property tax together, at all and completely ignores the the property tax from the rent apt (18% of your rent paid in that time period). This should be summed together as per NJ tax worksheet G and H in the NJ 1040 instructions!!!

PLS FIX THIS.

[Bees]

Is it possible that you have been given the benefit of the standard deduction for NJ an an additional $50 credit for real estate taxes.? Things did change a lot this last year. https://patch.com/new-jersey/pointpleasant/2019-tax-returns-what-you-should-know-new-jersey#:~:text=...

I hate the new tax law from the Feds. It was done to punish states like New York and New Jersey and to disadvantage home ownership in favor of landlords. Hmmmm

[yfeng-us]

It does seem to be a bug to me. Can we get this fixed?

[Cynthiad66]

You must enter the property taxes  in the Federal section of the return under Deductions and Credits.

Qualified homeowners and tenants are eligible for a deduction for property taxes they paid for the calendar year on their New Jersey principal residence. The new law increases the maximum Property Tax deduction from $10,000 to $15,000. For more information about the deduction, see Property Tax Deduction

Tenants and those homeowners who are not eligible for the Homestead Benefit because on October 1, 2020, they were not homeowners, may complete Form NJ-1040-HW to claim the property tax credit or they may claim the credit on Form NJ-1040. Do not file both Form NJ-1040 and Form NJ-1040-HW.

[dannitbt]

I hit the same bug too. Please fix asap

[ErnieS0]

New Jersey gives qualified homeowners and tenants either a property tax deduction or credit. TurboTax will compute the best result for you.

Check your answers property tax deduction/credit screens to make sure you filled out the information correctly. Also check whether the about of property taxes paid on principal residence is correct on the screen We Need to Know About Your Property Taxes.

Homeowners and tenants who pay property taxes on a primary residence (main home) in New Jersey, either directly or through rent, may qualify for either a deduction or a refundable credit when filing an Income Tax return.

The property tax deduction reduces your taxable income. You can deduct your property taxes paid or $15,000, whichever is less. For Tax Years 2017 and earlier, the maximum deduction was $10,000. For tenants, 18% of rent paid during the year is considered property taxes paid. Keep in mind that the amount of property taxes paid that you can deduct depends on a number of factors, such as the number of owners or units. Visit Determining the Amount of Property Taxes Paid for more information.

The property tax credit reduces your tax due because it is subtracted directly from your tax liability. The benefit is a refundable credit of $50.

You can claim only one of these benefits on your tax return. If you qualify (see Eligibility Requirements), follow the instructions in the New Jersey Resident Income Tax return (Form NJ-1040 ) to determine if the credit or deduction will give you the greater benefit.

Refer to: NJ Income Tax Property Tax Deduction/Credit for Homeowners and Tenants

[SweetieJean]

NJ gives you the better of the two, which can change from year to year.  See Worksheet H on page 28 here:

Instructions for the 2020 NJ-1040 (state.nj.us)

If you still think TT is wrong, please post back.

[np07310]

I'm wondering if this is a glitch because I'm working in NY and living in NJ.  Does this make my NJ tax liability pretty much zero and hence the NJ property tax deduction wasn't better than the $50 credit?  If so, is there a way to fix this? 

[DaveF1006]

According to this link from NJ.gov, you can take both. If your taxable income was nominal, Turbo Tax may have determined that the credit was more advantageous than the deduction.  

Select this link and see if this will help you make a decision on whether or not to take the deduction or credit. Working in New York should not have any effect in your calculation, as far as determining a deduction or credit.