11 Apr What counts for Senior Freeze income?
Q. Are interest, dividends and capital gains earned within an IRA but reinvested instead of being distributed included for the purpose of determining total income in the Senior Freeze Program?
A. Nope, they’re not.
Interest, dividends and capital gains earned within an IRA but reinvested instead of being distributed are not included for the purpose of determining total income for the New Jersey Senior Freeze, said Howard Hook, a certified financial planner and certified public accountant with EKS Associates in Princeton.
But, Hook said, any taxable distributions from an IRA are considered as part of total income when determining financial eligibility.
He said there are several items that do count towards determining total income that you may not realize because they’re not taxed by New Jersey.
“Roth IRA distributions, although not subject to New Jersey income tax, are considered part of total income,” Hook said. “This is a tricky one because the instructions say to include the `portion of any distribution from a Roth IRA you received that you would have reported as taxable if it were a traditional IRA.'”
Hook said this could mean all of the Roth IRA distribution is includible, or it could mean only a portion is includible. This would depend on whether the IRA account contains after-tax IRA contributions.
“Tax exempt dividends or interest received even from New Jersey sources count as well towards total income, as does Social Security income,” he said. “Even inheritances received count towards total income.”
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This post was initially published in April 2017.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.