Due to the recent tax reform legislation that was passed, it is no surprise that the 2018 Tax Filing season will not begin until January 29, 2018.  According to the IRS, the opening date was set at January 29th, to ensure the readiness of the forms and to evaluate the potential implications of the new tax legislation on 2017 Tax Returns. 

Filing season will begin on January 29th and end on April 17th.  This year taxpayers will have an additional 2 days since April 15th falls on Sunday and Emancipation Day observance is on Monday, April 16th.  Most refunds will continue to be processed within 21 days, provided there are no issues.  As mandated by law, taxpayers receiving the Earned Income Tax Credit (EITC) or the Additional Tax Credit will have to wait until February 27, 2018 to receive a refund. 

For the fastest and most accurate processing, taxpayers are strongly advised to file electronically and opt for direct deposit.  Paper returns could lead to slower processing times and inaccurate processing.  Taxpayers can always check the status of their refunds by visiting the Where’s My Refund Tool on www.irs.gov.

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Just like last year, the IRS continues to work with leading security officials to safeguard taxpayer information and strengthen security protocols as a part of the Security Summit initiative.

As you know, the nation has just received a massive overhaul to the existing tax laws.  One thing is certain and that is the legislation will affect everyone and the laws are currently in effect for 2018, 2019 tax filing season.  Be sure to tune into my next article where I will discuss the impact of the new federal tax reform.

Are you aware that New Jersey’s tax code has some changes this year that are worth highlighting?

Veteran’s Exemption

Taxpayers who were honorably discharged from active service in the Military, Reserves, or National Guard may claim a $3,000 personal exemption for 2017.  This is in addition to all other exemptions claimed.  The exemption can also be claimed by a spouse, if spouse is a Veteran who was honorably discharged from active service in the Military, Reserves, or National Guard. 

The Division of Taxation will require proof of service to claim the exemption.  Veterans are encouraged to certify status and submit the proof prior to filing a return to avoid a delay in processing.  This pre-certification of status can be performed on the Division of Taxation’s website http://www.state.nj.us/treasury/taxation/military/vetexemption.shtml.  Some acceptable forms of documentation include Form DD-214, Form DD-256, or Driver’s License with Veteran Status. 

To certify and provide proof for the exemption, Veterans must complete the Veterans Income Tax Exemption Submission Form which can be found here http://www.state.nj.us/treasury/taxation/military/vetexemption.shtml and forward One form of acceptable documentation by one of the three methods outlined below.

  1. Use Secure Document Upload Feature on Division of Taxation’s website to send Veterans Income Tax Exemption Submission Form and proof of status documentation and enter the notice code VET and select PO Box 440; or
  2. Mail a copy of Veterans Income Tax Exemption Submission Form and proof of status documentation: The New Jersey Division of Taxation, Veteran Exemption, PO Box 440, Trenton, NJ 08646-0440
  3. Fax Veterans Income Tax Exemption Submission Form and proof of status documentation to 609-633-8427

The good news is that once certified, the Veteran will not have to provide proof in subsequent years.

Increase of Pension Exclusion

This year some retirees will get to double the pension exclusion claimed in previous years.  The increase in the pension exclusion is part of a 4-year plan outlined by the Division of Taxation.  Taxpayer must be 62 or older or disabled (per Social Security guidelines) as of last day of the calendar year and income must be $100,000 or less to be eligible.  A single person may exclude $30,000 of pension income in 2017 versus $15,000 in 2016, while a married filing jointly couple may exclude $40,000 in 2017 versus $20,000 in 2016.  Click the link below for chart detailing, in 2020, the exclusion will increase to $75,000 for a single person and $100,000 for married filing jointly couple.

Retirement Income Exclusions for Tax Year 2017 and After

Wounded Warrior Caregiver Credit

This is a refundable tax credit (can reduce tax liability below zero) available to family member caregivers of armed forces with disabilities that stem from service.  Credit will be available for 2018 Tax Year. 

Credit is equal to the lesser of:

  1. 100% of Service Member’s Disability Income OR
  2. $675

Estate Tax

The estate tax exemption has increased from $675K to $2MM in 2016 and 2017 respectively.  As of 2018, the estate tax has been eliminated completely.  Taxpayers can now leave more than $2MM to their heirs and not incur any estate taxes, but will still need to pay inheritance taxes.

Carletta Beckwith CPA LLC is a firm that provides premiere income tax preparation, tax planning, and financial planning services. Carletta Beckwith is a licensed CPA and CFP® and shares her extensive industry knowledge to deliver superior customer service and personalized attention to her clients.  To learn more about the services she provides visit www.beckwithcpa.com.  You may email her directly at carletta@beckwithcpa.com.

IRS Circular 230 disclosure: Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency. 

Disclaimer: Nothing in this document should be relied on and you should seek professional advice if you need tax information or advice.  This publication should not be a substitution for personal tax advice as every tax situation is different.  You should obtain personal tax advice from a Certified Public Accountant or other tax professional to address your specific tax needs.