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Level 3

Overwithheld NJ State Tax first half of 2022

Hi All-


My employer withheld NJ taxes at an extremely high amount throughout the first half of the year ( their error) , It was corrected in July to a normal monthly rate. The amount withheld was so high that i am already way past my liability paid with 5 months to go. Other than claiming the max allowances is it pretty much a situation where i just need to wait till i file to get a refund? Would claiming EXEMPT for 5 months be considered illegal ( reading through the NJ exempt form it seems it would be illegal)? My employer insists since they already paid it theres nothing more they can do.

3 Replies
Level 15

Overwithheld NJ State Tax first half of 2022

According to your estimates,

you will get back all the NJ withholding you pay from now till the end of the year, and then some, all else being equal.

That's just the way it is.


You could adjust NJ-W-4 withholding, and you could apply some 2022 refund to your 2023 NJ taxes.

It's probably not a good idea to complicate your situation this way.


Level 15

Overwithheld NJ State Tax first half of 2022

@CuriousWhale - I see no downside to increasing your exemptions on the state withholdings since you beleive you are way over withheld.  You just have to decide if all the complexity (remember you have to change it back in January) is worth it.  Worst case, you will settle up with NJ in April and receive a big refund. 


something else to consider, if you itemize, how does that affect hitting the SALT limit in 2022 and 2023? NJ is one of the states where a large number of tax payers are subject to SALT.  So, for example, if you were to do nothing, and hit the SALT limit in 2022 (because the withholdings are so high), but not hit the SALT limit in 2023 (remember that large state refund would reduce the taxes paid in 2023), then it would make sense to stop the withholdings now so everything is smoothed out ... if you take the standard deduction or would hit the SALT limit in both years even if you did nothing, then this is not going to matter. 



Level 3

Overwithheld NJ State Tax first half of 2022

Thanks, i plan non using the standard deduction as it usually works out to be SLIGHTLY better.


Unless i have some major medical expenses that would total over 7.5% income i cant see a scenario i would itemize in either year.


I guess i will just plan to have a nice payday from NJ in April next year.

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