18 Mar Does a Roth conversion count as income for the Senior Freeze?

Q. Does a Roth conversion amount count towards income limits when filing for the Senior Freeze?
— Senior

A. The New Jersey Senior Freeze property tax benefit reimburses eligible senior citizens and disabled persons for property tax increases.

It’s important to know what income counts. First, let’s go over the rules.

To qualify, 2022 income must be $150,000 or less and 2023 income must be $163,050 or less, the state said.

There is also no longer a requirement that you be a New Jersey resident for 10 years in a row, it said.

The Senior Freeze website says you must have owned and lived in your home since Dec. 31, 2019, or earlier and you still owned and lived in that home on Dec. 31, 2023.

Also, you or your spouse or civil union partner must have been 65 or older on or before Dec. 31, 2022, or receiving federal Social Security disability benefit payments (not benefits received on behalf of someone else) on or before Dec. 31, 2022 to qualify, the Treasury Department said.

You must also have paid 2022 property taxes by June 1, 2023 and 2023 property taxes must be paid by June 1, 2024, the agency said.

Second or vacation homes, homes that have more than four units or have more than one commercial unit, and those that are exempt from

paying property taxes are not eligible.

Now, what income counts?

Most income, actually.

The Division of Taxation says you must report the taxable amount of pension and annuity payments, including IRA withdrawals, which can be found on the Pensions, Annuities, and IRA Withdrawals line on your New Jersey Resident Income Tax Return, Form NJ-1040.

Any taxable distributions from an IRA are considered as part of total income, and a Roth conversion would be included.

There are several items that do count towards determining total income even though they’re not taxed by New Jersey.

Roth IRA distributions, although not subject to New Jersey income tax, are considered part of total income.

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.

This could mean all of the Roth IRA distribution is includible, or it could mean only a portion is includible, depending on whether the IRA account contains after-tax IRA contributions.

Items not taxable in New Jersey, such as Social Security, are considered income for Senior Freeze eligibility.

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This story was originally published in March 2024.

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