07 Feb Can N.J. tax this Florida resident?
Q. I participated in a nonqualified deferred compensation plan in New Jersey run by Darden Restaurants. I retired at age 66 in October 2017 and moved to Florida in December 2017. In January 2018, I received my first mandatory distribution, from which Darden withheld 9 percent of my check for New Jersey income tax. Florida has no income tax. What can I do here?
A. Congrats on your retirement!
Lots of people have fled New Jersey during retirement to take advantage of more tax-friendly states.
But you said this is a nonqualified deferred compensation plan, and that makes all the difference.
The New Jersey tax withholding from your distribution was correct, said Gail Rosen, a certified public accountant with Wilkin & Guttenplan in Martinsville.
She said the nonqualified deferred compensation that you receive, even as a non-resident, is subject to New Jersey tax.
However, Rosen said, if any distribution payments are considered pension income – reported to you on federal form 1099-R – they are nontaxable to you as a nonresident and no New Jersey income tax should have been withheld.
“The 9 percent New Jersey tax withheld will probably be higher than what you will owe to New Jersey,” she said. “For 2018, you will file a New Jersey non-resident return and I expect that you will get a refund for the difference between the actual New Jersey tax and the amount that was withheld.”
Email your questions to moc.p1582219350leHye1582219350noMJN1582219350@ksA1582219350.