the staff of the Ridgewood blog
River Edge NJ, Assemblywoman Holly Schepisi in a post on Facebook she reminds everyone please do not forget to file your taxes today. And while we are on the subject of taxes, for anyone who doesn’t understand why people leave this State — I just received my own tax returns from my accountant. I owed the Federal government $0. In fact many years I overpay. The State of NJ? I owe them money almost every single time. How or why can I owe the Federal government nothing and owe thousands of additional dollars to NJ? Because New Jersey does not allow you to take many of the deductions that are allowed at the Federal level. For everyone complaining about the SALT Cap at the Federal level these are the items that NJ does not let you deduct:
1. NJ does not allow you to exclude from wages amounts you contribute to deferred compensation and retirement plans such as IRA, SEP IRA and Keogh Plans.
2. New Jersey does not allow you to deduct moving expenses or employee business expenses.
3. New Jersey does not allow you to deduct your un-reimbursed business expenses unless you are self-employed or an independent contractor.
4. New Jersey does not allow you to deduct your mortgage interest payments.
5. New Jersey does not allow you to deduct charitable contributions
6. New Jersey does not recognize capital loss carryovers. Why is this important? Let’s say you have a $50,000 unused capital loss from an investment from a prior year and a $50,000 capital gain for the current year. The federal government allows the carryover loss and the gain to offset each other. NJ, on the other hand, ignores the unused capital loss from last year and you get taxed on the entire $50,000 gain from the current year.
Interesting fact — NJ didn’t have income taxes until 1976 when the New Jersey courts mandated it to pay for education. The tax was 2% on the first $20,000 of income and 2.5% on any additional income thereafter. The average tax rate in New Jersey now exceeds 5% and goes as high as 10.75%. Meanwhile a majority of educational costs in this State are paid out of our property taxes (which are among the nation’s highest property taxes). How did that work out for the State?
Unfortunately our Governor and democrat controlled Legislature do not believe that you, the residents of New Jersey, pay enough in taxes. Therefore they are voting on a bill this week to allow borrowing of $10 BILLION so that no cuts need to be made and will be raising your taxes to pay for it.
New Jersey is a tax on GROSS INCOME.
That’s why the rate STARTED very low.
and remember…….most federal deductions are an attempt at social engineering.