08 Mar How do I report a rebate on my tax return?

Q. I had to replace my HVAC system in 2023. I was able to get a rebate on it from NJNG. Do I report the rebate anywhere on federal and New Jersey state tax returns as income? Confused because I do see I can get a credit for it on the federal return.
— Honest taxpayer

A. We hope your new system is working for you.

It’s a great question.

The rebate is considered a refund of an overpayment for your HVAC system, said Christine Melilli, a certified public accountant with Smolin, Lupin & Co. in Red Bank.

In other words, it is an offset to the amount you paid for the HVAC system, she said.

“Since you did not take a deduction on your federal or New Jersey income tax returns for the purchase of the HVAC system, you are not required to add back any refund/rebate issued,” she said. “Examples of refunds that could potentially result in taxable income in the case where a tax benefit is derived, are state tax refunds, or medical reimbursements. A rebate is not treated similarly to these items.”

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This story was originally published in March 2024.

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