27 Jan Do I have to report ANCHOR on my tax return?

Q. Does the $1,750 ANCHOR benefit need to be reported on my 2024 federal income tax return?
— Homeowner

A. Let’s start with New Jersey.

ANCHOR payments are not taxable for New Jersey income tax purposes and should not be reported on the New Jersey income tax return.

On your federal return, it’s a little more complicated.

The IRS calls these payments “recoveries,” as discussed in IRS Publication 525.

It follows the “Tax Benefit Rule,” which says you must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit reduced your tax in the earlier year.

According to the New Jersey Society of Certified Public Accountants, ANCHOR payments should reduce the real estate tax expense taken as an itemized deduction and not reported as income.

So if you take the standard deduction, recoveries won’t affect your federal tax return.

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This story was originally published in January 2025. 

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