03 Nov I’m a senior. What tax relief can I get?

Q. I am a senior citizen in New Jersey. I pay a mortgage on my home and I live alone. I get the ANCHOR benefit and the $250 a year tax relief for veterans Do I qualify for any other tax relief? Do I have to pay taxes at this time? I am 75 years old and I get two small pensions.
— Taxpayer

A. Let’s first talk about your overall income.

New Jersey has what’s commonly called the pension exclusion.

If your only income besides the two small pensions is Social Security, it’s likely that you qualify, said Neil Becourtney, a certified public accountant and tax director with Smolin, Lupin & Co. in Red Bank

If that’s the case, you probably won’t incur any New Jersey personal income tax liability, Becourtney said.

New Jersey, like many states, never taxes Social Security benefits, up to 85% of which can be subject to federal income tax, he said.

You said you live alone, so we’re going to assume you’re single.

But let’s go over the rules for everyone.

If your total income is $100,000 or less, you can exclude reported taxable pension, annuity, and IRA withdrawals up to the maximum amount for your filing status, which is married filing jointly at $100,000, married filing separately $50,000 and single/head of household/qualifying widow(er) at $75,000.

If your total income is $100,001, but not more than $125,000, you can exclude a percentage of your reported taxable income based on your filing status: married filing jointly at 50%, married filing separately at 25% and single/head of household/qualifying widow(er) at 37.5%.

Those whose income is $125,001 but not more than $150,000 can exclude a percentage of income based on your filing status at the levels of married filing jointly at 25%, married filing separately at 12.5% and single/head of household/qualifying widow(er) at 18.75%.

You mentioned you are a veteran.

“New Jersey provides an annual exemption of $6,000 for any veteran that was honorably discharged from active duty,” Becourtney said. “The first year that this exemption is claimed requires submission of documentation of the honorable discharge.”

All taxpayers who have attained age 65 are entitled to claim an additional $1,000 exemption, he said.

“Neither of these exemptions will be relevant for you assuming the pension exclusion wipes out your pension income,” he said.

You said you get ANCHOR, and that’s great. Also make sure you apply for the Senior Freeze. You can learn more about that here. 

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This story was originally published on Nov. 3, 2023.

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.