18 Mar Can we file separately to get the pension exclusion?

Q. For the 2024 tax year, my husband had an extra IRA withdrawal so our income is close to $200,000. We previously got the pension exclusion. Can we file separately to get it still or are other exceptions made?
— Trying to save

A. We understand you’re trying to pay as little in tax as possible.

Lawmakers, too, realized this when they created the pension exclusion.

And they created a variety of rules for taxpayers to follow, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

“If your joint income is under $100,000, the entire pension proceeds are excludable,” Karu said. “Between $100,000 and $150,000, there is a phase-out and only a percentage is excludable.”

With joint income of $200,000, you do not qualify, he said.

But the pension exclusion is reduced when you file separate returns, Karu said.

“If you elect to file separate returns, each of you are limited to $50,000 of total income,” he said. “So, depending on the breakdown of the income between the two of you, you may be able to take advantage of the pension exclusion.”

One word of caution, though. Much of the time when people file separate returns, the federal tax is higher, Karu said.

“Please be sure to look at both federal and state before making a decision,” he said.

Email your questions to .

This story was originally published in March 2025.

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.