New Jersey shared responsibility payment calculation

[Irene2805]

What is your question?

Perhaps this will help.  The complete line 52 instructions and Worksheet L are available by clicking this link: NJ Shared Responsibility Payment

[ekghsk]

NJ resident here. I didn't have health insurance for two months last year so I applied for an exemption and received my exemption code from NJ because the gap was less than 3 months. However, when I filled out my NJ tax return and entered the code that was provided to me, I still have to pay NJ $157shared responsibility payment. Why is that? What do i need to change in my NJ tax return? It looks like the payment was assigned by mistake. 

[IsabellaG]

You need to enter the exemption code and check the months for which the exemption applies in addition to the months for which you had coverage.

In the NJ-HCC worksheet, it says:" Enter the name and Social Security number for each member of your tax household. Check the box for every month each person had minimum essential health coverage or qualified for an exemption." 

So in your case all 12 months should be checked.

[1597980]

I lost my job in March 2022 and didn't work for the rest of the year.  I did not purchase health insurance because COBRA was way too expensive.  I had rental income for a few more months, then sold the rental property in December which generated a large capital gain.   Now NJ calculated my share responsibility payment based on my household income, nearly 90% of which is capital gains.  If I tried to apply for exemption, the instructions tell me to use the same number.  But the household income is very artificially inflated.  What if I did not sell the rental property?  Also, the capital gains include recaptured depreciation.  What can I do?  Please help!  

Thank you!

[HopeS]

In general, failure to have health coverage or qualify for an exemption may result in the assessment of a Shared Responsibility Payment (SRP) on your New Jersey Income Tax return. Individuals who are not required to file a New Jersey Income Tax return are automatically exempt from the SRP. The amount of the SRP is generally based on your income and family size and is capped at the statewide average annual premium for Bronze Health Plans in New Jersey.

If you are a New Jersey resident, all of your capital gains, except gains from the sale of exempt obligations, are subject to tax. When you calculate the gain or loss from each transaction, you can deduct expenses of the sale and your basis in the property. The basis to be used for calculating gain or loss is the cost or adjusted basis used for federal income tax purposes. There is no exception to Depreciation recapture when a rental property is sold for Federal or State purposes.

Note: For the shared responsibility payment, household income is the income of all members in a household, including dependents. Therefore, the SRP would d include capital gain from the sale of your rental property. You could try calling NJ to discuss SRP exemption given your situation.  

Use the link below to apply for NJ health insurance mandate coverage exemptions:

NJ Health Insurance Mandate

Additional information:

NJ Gov 

Review the section in the link below regarding the Exemption from Shared responsibility payment.

Questions and answers on Individual SRP

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