LIVINGSTON, NJ — When it comes to filing taxes for diverse sources of income, Michael H. Karu, CPA/CFF, senior member of the Livingston-based accounting and consulting firm Levine, Jacobs & Company, LLC, recently advised New Jersey residents on what they should consider as taxable income.
Initially prompted by a 66-year-old reader of “NJMoneyHelp.com” who collects a pension, Social Security, unemployment and an early-out retirement package of 50% pay, Karu explained that all of these sources of income are taxable either in New Jersey or on a federal level.
According to Karu, pensions—including IRAs, with the exception of Roth IRAs—are considered taxable income in New Jersey, while unemployment and Social Security are both taxable for federal purposes, but not for the State of New Jersey.
“Per the IRS, to find out if Social Security benefits are taxable, taxpayers should take one half of the Social Security money they collected during the year and add it to their other income,” he said. “If you are single and that total comes to more than $25,000, then part of the Social Security benefits may be taxable.”
In 2020, Karu noted that a significant number of people collected unemployment benefits for part of the year and had W-2 income for the remainder of the year. For those people, the W-2 income will be taxable at both the federal and state level, while the unemployment benefits will only be taxable at the federal level,” he explained.
“That holds true whether the W-2s were received for full-time or part-time work,” said Karu. “Also, if people received 1099s for non-employee compensation, it will be taxable both federally and state. If any of this side income was not properly reported to the NJ Department of Labor, Employment Security, a portion of the Unemployment Benefits received may have to be returned.”
Karu is currently the senior member at Levine, Jacobs & Company, LLC, which prides itself on its teamwork abilities where “every account receives the talent and expertise of the whole firm.”
He received his Bachelor of Science degree in Business Administration from The Ohio State University and holds professional memberships in the American Institute of Certified Public Accountants, the AICPA Tax Division and the AICPA Business Valuation, Forensics and Litigation Services Section, as well as the NJ State Society of CPAs.
In addition to being a certified divorce mediator and certified in financial forensic in addition to being, Karu is also a published author of numerous articles seen in trade and consumer publications and has been a guest on radio and television shows.
To learn more about Levine, Jacobs & Company, LLC, visit the award-winning firm’s website BY CLICKING HERE.
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