Thursday, December 27, 2012


The 2012 NJ state income tax forms and instructions are now available at the NJ Division of Taxation website.

The big change for the 2012 NJ-1040 is the new “Alternative Business Calculation Adjustment”.

Beginning with 2012, taxpayers who have losses in the categories of -

·      net profits from business,
·      net gains or net income from rents, royalties, patents, and copyrights,
·      distributive share of partnership income, and
·      net pro rata share of S corporation income
-    can use the losses to calculate an adjustment to their taxable income (“Alternative Business Calculation Adjustment”). 

The percentage used to calculate the adjustment is being phased in over five years. The percentage will increase from 10 percent for tax year 2012Taxpayers can carry forward unused losses in those categories for a period of 20 years to calculate future adjustments. 

Taxpayers with income and/or losses in any of these categories must complete two new return schedules: Schedule NJ-BUS-1 (Business Income Summary Schedule), and Schedule NJ-BUS-2 (Alternative Business Calculation Adjustment) to calculate the amount of their adjustment or loss carryforward.

A new Line 34 has been added to Page 2 of the NJ-1040 to enter the Alternative Business Calculation Adjustment.

I look forward to the January 2013 NJ-NATP “Famous State Tax Seminar” to learn how this new adjustment will work.

The only other changes to the NJ-1040 are –

·      A new worksheet has been developed (Worksheet G, Use Tax Calculation) to make it easier for New Jersey residents to determine the amount to report on Line 45, Use Tax Due on Internet, Mail-Order, or Other Out-of-State Purchases.

·      A new oval has been added below the signature line that must be filled in if a copy of a deceased taxpayer’s death certificate is enclosed with the return. This oval should be filled in and a copy of the death certificate enclosed only if there is a refund due and the check needs to be issued to the decedent’s surviving spouse/civil union partner or estate.

·      Three new funds have been added to the list of organizations to which taxpayers can contribute on the New Jersey tax return – the Boys and Girls Clubs in New Jersey Fund, the NJ National Guard State Family Readiness Council Fund, and the American Red Cross-NJ Fund.

Other than that the 2012 NJ-1040 is no different than the NJ-1040 of past years.

FYI - For 2012, the maximum employee unemployment insurance/workforce development partnership fund/supplemental workforce fund contribution (SUI) was $128.78, the maximum employee disability insurance contribution (SDI) was $60.60, and the maximum employee family leave insurance contribution (FLI) was $24.24.

I was pleased to find that it appears there is no longer an income limitation for submitting a NJ-1040 online via the NJWebFile system.  I should be able to submit the 2012 NJ-1040 for taxpayers with NJ Gross Incomes over $150,000 this way.



Anonymous said...

The most bothersome item to this reader is the Alternative Minimum Income Tax for tax year 2012 and the AMT exemption patch that has not been passed. Even if Congress would simply use the same one from 2011, millions of families would be spared the dreaded tax. (I'm aware there is a Bill out there with an inflation adjusted new amount for 2012 but I'll be satisfied with just keeping the one from 2011.)

Simply put -- the difference between the $45,000 exemption amount (now current law) for MFJ and the $74,450 amount for the tax year 2011 leaves a difference of $29,450 multiplied by 26% (for AMTI income up to $175K) or a maximum additional amount of tax of $7,657 as the effect of not passing a patch at least equal to the one for tax year 2011. Any MFJ family's additional tax would obviously be dependent on the amount of itemized deductions. In my family's case, high New York property taxes plus high New York income taxes would not be allowed and our additional tax bill would be several thousand dollars more if no patch is passed. (Also dependent upon size of income, some families MFJ who take the standard deduction might be affected as well.)

I have done my citizen's best by writing and calling my 2 Senators' offices and also Congressional Representative's office numerous times over the past 6 months. On December 26, I called Harry Reid's office to complain as well. I sent an E-mail to the White House also. I left messages stating I blamed both sides as well as President Obama for the mess we are in. Perhaps more of us should pick up the phone, call and let the politicians hear our disgust!!!!!!

P.S. --- I have also been sitting at my computer running different scenarios --- pay the property taxes in 2012 (now) or postpone to January 2013 (with no knowledge of what the tax rates will be) but using assorted guestimate rates.

Will Congress retroactively patch the AMT in 2013 or 2012? If I as an individual am stymied by Congress' inaction, how will businesses figure out what the best course of action for their companies will be for 2013?

Hortense Salinas said...

This is still a good way on how to divert the losses of the company so that in whatever sense, they can be profitable and they can still cope up from the losses.