30 Jun Veterans’ tax break for short-timers

Q. If I served six months active duty and three years in New Jersey National Guard, am I entitled to any tax benefit with the new law? If so what else must I due to verify my status?
— Short served

A.  You’re talking about a new tax break for veterans that was part of the gas tax bill.

Under the law, veterans may qualify for an exemption of up to $3,000 on their New Jersey tax return for income earned in 2017.

This law is in addition to other exemptions or deductions for which veterans may qualify, such as military pension exemptions and the annual $250 property tax reduction, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Eatontown.

“The exemption is available for all veterans who received honorable discharges or who were released under honorable circumstances from active duty in the Armed Forces of the United States, a reserve component thereof, or the National Guard of New Jersey in a federal active duty status,” he said. “Veterans may claim the exemption when they file their 2017 gross income tax returns.”

How much can you save?

If subject to the highest state tax bracket of 8.97 percent imposed on taxable income above $500,000, this exemption would produce a tax savings of $269, Becourtney said, noting the tax benefit for most veterans would likely be much lower.

“With strained resources it is unlikely that this new veteran’s exemption will undergo significant scrutiny by the Division of Taxation,” Becourtney said.

But, be prepared.

In the event Taxation was to question you regarding a claimed veteran’s exemption, you would need to be able to provide documentation of either your honorable discharge or release under honorable circumstances, Becourtney said.

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This post was first published in June 2017.