14 May How does a Roth conversion count as income for the Senior Freeze?

Q. How does a Roth conversion count as income for the Senior Freeze? I would have thought that it did, but I’m confused about the instructions on the application. Can you walk me through it?
— Senior

A. The Senior Freeze program reimburses senior citizens and disabled taxpayers for property tax increases.

To qualify, there are several eligibility requirements.

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.

Homeowners must have owned and lived in their home since Dec. 31, 2019, or earlier, and still owned and lived in the home on Dec. 31, 2023 to qualify. They must have paid 2022 property taxes by June 1, 2023 and 2023 property taxes must be paid by June 1, 2024, the agency said.

Mobile home owners must have leased a site in a mobile home park where they placed a manufactured or mobile home that they owned since Dec. 31, 2019, and they must have lived in the home and leased the site on Dec, 31, 2023. Site fees must have been paid by Dec. 31 of 2022 and 2023.

Your 2022 income must be $150,000 or less and 2023 income must be $163,050 or less.

Once those requirements are met, it’s time to complete Form PTR-1, said Ann Marie Perry, a certified public accountant with Peapack Private Wealth Management in Summit.

“Your question is referencing page 2 of the application, which tallies your total income,” she said. “Line B asks for pension and retirement benefits including IRA and annuity income.”

However, on page 8 of the PTR-1 instruction booklet, Roth IRA conversions are specifically excluded from income on Line B:

“Do not include … a conversion from an existing traditional IRA to a Roth IRA.”

“When you do take a distribution from this Roth IRA in the future, you would report it on Line B per the PTR-1 page 8 instructions under `Adjustments,’” she said.

The form says: “Add the portion of any distribution from a Roth IRA you received that you would have reported if it were a traditional IRA.”

“Money is shown on Line B when it is withdrawn and not when it is converted to a Roth IRA,” Perry said.

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This story was originally published in May 2024.

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