06 Mar Must I withhold state taxes from my pension?

Q. I will be 62 in November of 2021. My $44,000 pension is my only source of income. In tax year 2021, can I write off the pension amount. Can I then stop withholding state taxes? If I don’t owe any taxes on my pension, why tax myself, right?
— Retired

A. Seriously. Who wants to tax themselves if it’s not needed?

A taxpayer can stop state withholdings or stop making estimated tax payments if they believe they won’t owe any New Jersey state income taxes, said Charles Ott, a certified public accountant with Levine, Jacobs & Co. in Livingston.

Those who are age 62 or older or blind/disabled on the last day of the year and who have total income of less than $100,000 can qualify for the exclusion, Ott said.

For the 2021, the exclusion for those married filing jointly is $100,000 and it’s $75,000 for singles, he said.

“So if a taxpayer’s total income from all sources is under the limit for their filing status they may not be required to pay or remit state taxes or have them withheld from their retirement income,” Ott said.

New Jersey total income can be different from federal taxable income because Social Security benefits, New Jersey municipal bond interest and U.S. bond interest are not taxable to New Jersey.

“Keep in mind this is not an exemption from federal taxes,” he said.

Before you make the change, be sure you don’t have other income that will count towards the exclusion. You don’t want to be surprised by a tax bill come tax time.

Email your questions to .

This story was originally published on March 5, 2020.

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.