GIT-1, Pensions and Annuities - New Jersey · 2014. 3. 25. · Bulletin GIT-1 2 Rev. 12/02 Military...

Rev. 12/02

IntroductionThis bulletin explains how to report pen-sion and annuity income on your NewJersey gross income tax return. It alsodescribes the income exclusions whichqualified taxpayers can use to reducetheir New Jersey taxable income.

Changes in Exclusion AmountsThe amount of pension and other incomethat can be excluded on the New Jerseyincome tax return is being increased overa four-year period that began in tax year2000. For tax year 2002, married couplesfiling jointly may exclude up to $17,500,single individuals, $13,125, and marriedpersons filing separately, $8,750. For taxyear 2003, married couples filing jointlywill be able to exclude a maximum of$20,000, single persons $15,000, andmarried persons filing separately,$10,000. For more information, see“Income Exclusions” on page 8.

General InformationPension and annuity income is taxable and mustbe reported on your New Jersey income taxreturn. However, in some cases, the taxableamount of pension or annuity you show on yourNew Jersey tax return may differ from theamount taxable for Federal income tax purposes.This is because you may have to use a differentmethod to calculate the taxable amount for yourNew Jersey return than the method you use forFederal income tax purposes.

All state and local government, teachers’, andFederal pensions, and Keogh Plans are treated inthe same manner as employee pensions and annu-ities from the private sector. Amounts received as“early retirement benefits” and amounts reportedas pension on Schedule NJK-1, PartnershipReturn Form NJ-1065 are also taxable.

Social Security/Railroad RetirementBenefits/DisabilitySocial Security and Railroad Retirement bene-fits are exempt from New Jersey income tax andshould not be reported as income. Paymentsfrom a public or private pension plan as a resultof total and permanent disability are alsoexempt. However, if an individual retired beforeage 65 on a total and permanent disability pen-sion, and continues to receive pension paymentsafter age 65, the disability pension is treated asordinary pension beginning at age 65.

GIT-1, Pensions and Annuities

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Military PensionsIf you are receiving a U.S. military pension orsurvivor’s benefit payments, the military pen-sion or survivor’s benefit is not taxable for NewJersey gross income tax purposes, regardless ofyour age or disability status. Do not include suchpayments on your New Jersey return.

Military pensions are those resulting fromservice in the Army, Navy, Air Force, MarineCorps, or Coast Guard. This exemption doesnot apply to civil service pensions or annui-ties, even if the pension or annuity is based oncredit for military service. Most military pen-sions and survivor’s benefit payments arereceived from the U.S. Defense Finance andAccounting Service, while a civil serviceannuity is received through the U.S. Office ofPersonnel Management. For more informa-tion on military pensions, request Tax TopicBulletin GIT-7, Military Personnel.

Individual Retirement Arrangements(IRAs)An IRA is a personal savings plan in which youset aside money for retirement. Taxable amountswithdrawn from an IRA are reported on thesame line of the New Jersey tax return as tax-able pensions and annuities.

If you receive payments from an IRA, requestTax Topic Bulletin GIT-2, IRA Withdrawals, forinformation on how to calculate the taxable por-tion of the withdrawal for your New Jerseyincome tax return. For information on RothIRAs, request Technical Bulletin TB-44. Do notuse the methods described here for calculatingthe taxable portion of a withdrawal from apension or annuity for an IRA Withdrawal.

Part-Year ResidentsAny person who became a resident of NewJersey or who moved out of this State during theyear is considered a part-year resident. A part-year resident files a New Jersey income tax resi-dent return which covers the period of residencein New Jersey and reports only the income he orshe earned or received while a resident here.Part-Year residents must prorate all exemptions,deductions, credits and exclusions (including thepension and other retirement income exclusions)to reflect the period covered by the return. Formore information, request Tax Topic BulletinGIT-6, Part-Year Residents.

NonresidentsPension and annuity income received by a non-resident for work performed in New Jersey isnot taxable under the New Jersey Gross IncomeTax Act. If your only income from New Jerseysources is pension or annuity income, you neednot file a New Jersey nonresident return. How-ever, if you have other income from New Jerseywhich is taxable to a nonresident (e.g., wages,business income, gain from sale of real propertyin New Jersey), you are required to file a NewJersey Income Tax Nonresident Return (FormNJ-1040NR).

Withholding Tax and Estimated TaxNew Jersey residents who receive pension orannuity income may request the payer to with-hold New Jersey income tax from these pay-ments. If you wish to have New Jersey incometax withheld, complete Form NJ-W-4P, Certifi-cate of Voluntary Withholding of New JerseyGross Income Tax From Pension and AnnuityPayments. Indicate the amount of tax to be with-held and give it to the payer of the pension orannuity.

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Federal civilian retirees can elect to have NewJersey income tax withheld from their Federalpension payments. Federal retirees wishing totake advantage of this option should call theFederal Office of Personnel Management, theagency which oversees Federal pensions, at1-800-409-6528. Voluntary New Jersey with-holdings are also permitted for retirees from theuniformed services.

Individuals who expect their New Jersey incometax liability to be more than $400 after takinginto account all their exemptions, deductions,credits and payments for the tax year arerequired to make quarterly estimated tax pay-ments. This requirement may affect taxpayerswho do not have New Jersey income tax with-held from their wages and/or pension, those whoare self-employed, or those whose income isfrom sources such as interest, dividends, or capi-tal gains, which are not covered by withholdingtax. Use Form NJ-1040-ES to file estimated taxpayments when due. For more information onestimated tax payments, request Tax TopicBulletin GIT-8, Estimating Income Taxes.

RecordkeepingKeeping records will help you prepare a com-plete and accurate tax return and pay the correctamount of New Jersey tax on income from yourpension, annuity, or IRA.

Contributions. It is very important to keep anystatements that show your contributions to yourpension, annuity, or IRA. You will need thisinformation when you start to withdraw moneyfrom the plan. You may have to pay more tax ifyou do not know the amount of your contribu-tions on which New Jersey income tax hasalready been paid.

Income Statements. Keep all the statementsfrom your pension, annuity, or IRA showing theamounts you have received from the plan. Theseinclude Forms W-2P and 1099-R.

Tax Returns and Worksheets. Keep copies ofthe tax returns you have filed and the income taxinstruction booklet as part of your records. Youmay need information from the return or fromthe worksheets in the instruction booklet to pre-pare future tax returns. This information is alsonecessary if you file an amended return. Copiesof your returns and other records can be helpfulto your surviving spouse, or the executor oradministrator of your estate.

Calculating Taxable AmountPensions and annuities fall into one of two cate-gories: noncontributory or contributory. A non-contributory plan is one to which an individualhas not made contributions, and a contributoryplan is one to which an individual has made con-tributions. The taxable amount you report on yourNew Jersey income tax return will depend onwhether the pension or annuity payment camefrom a contributory or a noncontributory plan.

Noncontributory PlansNoncontributory plans do not require an em-ployee to make contributions. Payments youreceive from such a plan are fully taxable be-cause you have never paid tax on any of thefunds in the plan. You will report on your NewJersey income tax return the total amount ofpension or annuity shown on the Form 1099-Ryou receive from the payer of the pension orannuity.

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Contributory PlansContributory pension plans are structured insuch a way that an employee contributes moneyat set intervals and collects an annual pensionupon retirement. In most cases, pension contri-butions are made through salary deduction andare included in the employee’s gross incomewhen the contributions are made.

The total value of the pension or annuity con-sists of your contributions, your employer’scontributions, if any, and earnings. Generallyyour personal contributions to the pension orannuity are taxed when they are made. Thosecontributions, once taxed, will not be taxedagain by New Jersey. Thus, the part of a pensionor annuity payment which represents a return ofcontributions which have already been taxedshould not be reported on your New Jerseyincome tax return. Any amounts you receive inexcess of your previously taxed contributionsare taxable and must be reported.

You must determine the taxable portion of pay-ments you receive from a pension or annuity towhich you have made contributions. For NewJersey purposes, you will use either the Three-Year Rule Method or the General Rule Methodto determine the taxable and nontaxable portionsof your pension or annuity. To determine whichmethod you should use, complete the followingworksheet.

NOTE: If your retirement plan is a 401(k) Plan,review the information on Section401(k) Plans on page 7 beforecontinuing.

Which Pension Method to Use

1. Amount of pension you will re-ceive during the first three years(36 months) from the date of thefirst payment.............................. 1.

2. Your contributions to the plan... 2.3. Subtract line 2 from line 1......... 3.

(a) If line 3 is “0” or more, and both youand your employer contributed to theplan, you may use the Three-Year RuleMethod.

(b) If line 3 is less than “0,” or your employerdid not contribute to the plan, you must usethe General Rule Method.

Three-Year Rule MethodYou may use the Three-Year Rule Method todetermine your New Jersey taxable pensionincome if:

1. You will receive an amount equal to orgreater than your pension and annuity con-tributions within three years (36 months)from the date you receive your first pay-ment from the plan, and

2. Your employer contributed to the plan.

When using the Three-Year Rule Method, youexclude pension and annuity payments fromgross income until the payments received equalthe amount you contributed to the plan. Untilthat time, the amounts you receive, because theyare considered contributions, are not taxable andshould not be reported on your New Jerseyreturn. Once you have received (recovered) anamount equal to the amount you contributed tothe pension or annuity, all amounts you receiveare fully taxable.


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NOTE: The Three-Year Rule Method has beenrepealed for Federal income tax pur-poses. If you recently retired, and areusing the Three-Year Rule Method forNew Jersey income tax purposes, theamount of taxable pension or annuityyou report on your New Jersey returnwill differ from the taxable amount onyour Federal return.

General Rule MethodYou must use the General Rule Method todetermine New Jersey taxable pension incomewhen:

1. You will not recover all your personalcontributions within three years (36months) from the date you receive yourfirst payment from the plan;

or

2. Your employer did not contribute to theplan.

When you use the General Rule Method, in thefirst year, and every year thereafter, part of yourpension or annuity payment will be excludable(the portion of that year’s distribution whichrepresents your contributions) and part will betaxable. Use the General Rule Method Work-sheet below to determine the taxable portion ofyour pension or annuity payment to be enteredon your New Jersey return.

Complete this worksheet the year in which youreceive your first pension payment and keep theworksheet for your records. Once you calculatethe percentage on line 3, you will use it to deter-mine the taxable amount year after year. Recal-culate the percentage only if your annualpension payments decrease.

General Rule Method Worksheet

1. Your previously-taxed contributions to the plan .......... 1.2. Expected return on contract* ........................................ 2.3. Percentage excludable (Divide line 1 by line 2) ........... 3. %4. Amount received this year ............................................ 4.5. Amount excludable (Multiply line 4 by line 3) ............ 5.6. Taxable amount (Subtract line 5 from line 4. Enter here

and on Line 19a, Form NJ-1040 or Line 42, Column A,Form NJ-1040NR)........................................................ 6.

*The expected return on the contract is the amount receivable. If life expectancy is afactor under your plan, Federal actuarial tables must be used to compute theexpected return. (The Federal actuarial tables are contained in the Internal RevenueService’s Publication 939, General Rule for Pensions and Annuities. Contact theIRS to obtain a copy of this publication.) If life expectancy is not a factor under yourplan, the expected return is found by totaling the amounts to be received.

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ExampleJames Henderson retired and began to receivean annual pension of $7,000. He contributed$20,000 to his pension, and his employer alsocontributed. James may use the Three-Year RuleMethod to calculate the taxable amount of hispension because the amount he will havereceived after three years from the date of thefirst payment ($21,000) exceeds the amount ofhis contributions ($20,000) by $1,000 (see line 3of worksheet), and his employer also contrib-uted to the plan.

Which Pension Method to Use

1. Amount of pension you will re-ceive during the first three years(36 months) from the date of thefirst payment.............................. 1. 21,000

2. Your contributions to the plan... 2. 20,0003. Subtract line 2 from line 1......... 3. 1,000

(a) If line 3 is “0” or more, and both youand your employer contributed to theplan, you may use the Three-Year RuleMethod.

(b) If line 3 is less than “0,” or your employerdid not contribute to the plan, you must usethe General Rule Method.

When using the Three-Year Rule Method, Mr.Henderson will exclude the pension paymentshe receives from his New Jersey gross incomeuntil he has recovered an amount equal to hiscontributions. Then his pension paymentsbecome fully taxable.

Thus, in the first year he receives $7,000 andreports $0 taxable pension on his New Jerseyreturn. In the second year he receives $7,000 and

reports $0 as taxable. In the third year hereceives $7,000 and reports $1,000 as taxablepension on his return. In the fourth year, andevery year thereafter, he must report $7,000 astaxable.

Remember when completing your tax return thatthe recovery period described above begins withthe date of the first pension payment. The “firstyear,” “second year,” etc. may not correspondwith the beginning of the taxable year.

If a taxpayer will not recover all personal con-tributions within three years (36 months) fromthe date of the first payment from the plan, or ifthe employer did not contribute to the plan, thenthe General Rule Method must be used to deter-mine the taxable amount of pension for NewJersey income tax purposes.

Thus, if James Henderson’s contributions to hispension plan were $20,000 and his annual pen-sion amount $4,000, he would have to use theGeneral Rule Method because he would notrecover an amount equal to his contributionswithin the first three years (36 months) after thefirst payment. Using the General Rule MethodWorksheet, he would calculate the percentage ofhis pension payment that is excludable fromNew Jersey gross income each year.

Contributions Prior to ResidenceAny contributions you made to a pension orannuity before you moved to New Jersey aretreated in the same way as they would have beentreated if you were living in New Jersey at thetime you made the contributions. Contributionsto plans other than 401(k) Plans are consideredto have been previously taxed. Use the appro-


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priate method to determine the taxable amountto report on your New Jersey return.

Section 401(k) PlansBeginning on January 1, 1984, New Jersey’streatment of 401(k) Plan contributions changed.After that date employee contributions to 401(k)Plans were no longer included in taxable wageswhen earned. If you made contributions to a401(k) Plan prior to January 1, 1984, your dis-tribution will be treated differently than if all thecontributions were made after this date.

1. All contributions made after January 1,1984. If all contributions to your 401(k) Planwere made after January 1, 1984, none of thecontributions were included in gross incomewhen they were made, unless the contribu-tions exceeded the Federal elective deferrallimit. As a result, distributions from the planare fully taxable.

2. Contributions made before January 1,1984. Contributions to a 401(k) Plan madebefore January 1, 1984, were included in anemployee’s gross income when they weremade. If you made contributions to a 401(k)Plan before January 1, 1984, or you madecontributions beyond the Federal limit, youwill calculate the taxable portion of your dis-tribution by using either the Three-Year RuleMethod or the General Rule Method, which-ever is appropriate.

Section 457 PlansIf you participated in an eligible deferred com-pensation plan of a state or local government ortax-exempt organization (Section 457), yourcontributions to the plan were included in yourNew Jersey gross income when they were made.

When you retire, you will only be taxed onamounts you receive in excess of thosecontributions.

For tax years ending prior to January 1, 2002,distributions of deferred pay were treated aswages and reported on Line 14, Form NJ-1040(or on the “wages” line in Column A, FormNJ-1040NR*). Taxpayers used the “Statewages” figure from the W-2 form they receivedfrom the Section 457 Plan, which in most caseswas different from the “Federal wages” amount.

For tax years beginning on and after January 1,2002, the Federal reporting document for Sec-tion 457 Plan distributions has changed from anIRS Form W-2 to Form 1099-R. Distributionsfrom a Section 457 Plan of amounts in excess ofpreviously taxed contributions are treated aspension payments and should be reported onLine 19, Form NJ-1040 (or Line 42, Column A,Form NJ-1040NR). See Calculating TaxableAmount on page 3 for information on how todetermine the taxable portion of your payment.

* Prior to January 1, 2002, distributions receivedfrom a Section 457 Plan by a nonresident werenot subject to New Jersey gross income tax, andshould not have been reported on the “wages”line in Column B, Form NJ-1040NR, providedsuch income was part of a series of substan-tially equal periodic payments (not less fre-quently than annually) made for the life or lifeexpectancy of the recipient (or the joint lives orjoint life expectancies of the recipient and thedesignated beneficiary of the recipient), or for aperiod of not less than 10 years, or if it was apayment received from a retirement benefitplan after termination of employment.

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Lump-Sum Distributions andRolloversWhen you receive a lump-sum distribution ofthe entire balance from a qualified employeepension, annuity, profit-sharing or other plan,the amounts you receive which are in excess ofyour previously taxed contributions to the planmust be included in income in the year youreceive them. New Jersey has no provisions forincome averaging of lump-sum distributions.

A lump-sum distribution, which you roll over(transfer) into a traditional IRA or other eligibleplan, is excludable from New Jersey income ifthe rollover qualifies for deferral for Federalincome tax purposes. The amount rolled over(minus previously taxed amounts) is taxablelater when it is withdrawn. As under Federallaw, the rollover must be made within the60-day period after distribution. For more infor-mation, request Tax Topic Bulletin GIT-2, IRAWithdrawals.

If you convert a traditional IRA into a Roth IRA,any amount from the existing IRA that would betaxable if withdrawn must be included in yourgross income.

Survivors and BeneficiariesGenerally, pension and annuity income receivedby a survivor or beneficiary is treated the sameway as regular pension or annuity income. Thus,amounts received, whether in the form of peri-odic payments or in a lump sum, are taxable tothe extent that they exceed the decedent’spreviously taxed contributions to the plan.

Upon the death of the owner of the pension orannuity, the amount paid to the surviving bene-ficiary is taxable to the extent that it exceeds thesurviving beneficiary’s contribution to the plan.

The surviving beneficiary’s contribution isdetermined as follows:

1. Where the distribution to the surviving bene-ficiary is subject to taxation by the NewJersey Transfer Inheritance Tax Act,* thecontribution of the surviving beneficiary isthe value of the annuity, pension, or retire-ment benefits as determined for TransferInheritance Tax purposes. The recipient canexclude from gross income tax the amountthat represents the contribution, which is thevalue determined for Transfer InheritanceTax purposes.

*Property inherited from a spouse who diedon or after January 1, 1985, is not subject toinheritance tax. Transfers to parents, grand-parents, children, or grandchildren of dece-dents who died on or after July 1, 1988, arealso not subject to inheritance tax. Contactthe Division’s Inheritance Tax Section at609-292-5033 for more information.

2. Where the beneficiary receives benefitswhich are not subject to Transfer InheritanceTax, he or she is entitled to exclude fromgross income the remaining previously taxedcontributions of the decedent. If thedecedent’s contributions to the plan havealready been recovered, all pension incomereceived by the beneficiary is taxable andmust be included in gross income.

Income ExclusionsNew Jersey tax law provides three retirementincome exclusions to enable you to reduce yourtaxable income: Pension Exclusion, Other Re-tirement Income Exclusion, and Special Exclu-sion. The exclusions are not a one-time benefit.


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You may use the exclusions on your New Jerseyincome tax return every year you qualify. Bothresidents and nonresidents may take advantageof the retirement income exclusions if they meetthe qualifications.

Pension ExclusionTaxpayers who qualify may exclude all or a partof the income received during the year from tax-able pensions, annuities and IRA withdrawals.The exclusion amounts are being increased overa four-year period which began in tax year 2000.

Filing Status

TaxYear

Married,FilingJointly

Married,FilingSeparately

Single,Head of Household,Qualifying Widow(er)

2000 $12,500 $ 6,250 $ 9,375

2001 15,000 7,500 11,250

2002 17,500 8,750 13,125

2003and after

20,000 10,000 15,000

If you and/or your spouse are 62 years of age atthe end of the tax year and you did not use themaximum Pension Exclusion amount for yourfiling status, or you did not use the Pension Ex-clusion because you did not report any incomeon Line 19a, Form NJ-1040 or Line 42, FormNJ-1040NR, you may still qualify for other ex-clusions. See Other Retirement Income Exclu-sion on page 10.

To qualify for the New Jersey Pension Exclu-sion you must be:1. 62 years of age or more by the end of the

taxable year (December 31 for calendar yearfilers); or

2. Disabled as defined by Social Securityguidelines.

The Pension Exclusion amount you may claimis the lesser of:1. Your actual taxable pension income; or2. The Maximum Pension Exclusion amount

for your filing status.

The Pension Exclusion used can never be morethan your actual taxable pension incomeamount. Remember, part-year residents mustprorate the Pension Exclusion amount by thenumber of months as a New Jersey resident.Request Tax Topic Bulletin GIT-6, Part-YearResidents, for more information.

On the resident return (Form NJ-1040), tax-payers show the actual taxable pension incomeamount on Line 19a, the allowable PensionExclusion amount on Line 19b, and the net tax-able pension income amount on Line 19c, aftersubtracting the Pension Exclusion. On the non-resident return, Form NJ-1040NR, taxpayersenter only the net taxable amount on Line 42,Column A, after subtracting the applicablePension Exclusion.

ExampleJohn and Linda Harris are both 63 years of ageand file a joint return. Their combined actualtaxable pension income for tax year 2002 totals$19,500.

Actual Taxable Pension Income......... $19,500Less: Applicable Pension Exclusion .. $17,500Net Taxable Amount .......................... $ 2,000

ExampleHenry Norton is 59 years of age. He is singleand not disabled. He receives a taxable pensionof $7,000 and $303 of his IRA withdrawal istaxable.

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Actual Taxable Pension Income........... $7,303Less: Applicable Pension Exclusion .... $ 0Net Taxable Amount ............................ $7,303

You must be 62 years old or disabled to claimthe Pension Exclusion.

ExampleJack and Mary Miller file a joint return and bothqualify for the Pension Exclusion. For tax year2002, Mr. Miller receives an annual taxable pen-sion of $19,000, and Mrs. Miller receives a$2,500 pension. She reports $0 as taxable in-come this year because she is using the Three-Year Rule Method and is still recovering hercontributions.


Only One Qualified SpouseWhen you and your spouse file a joint return,and only one of you is 62 years old or disabled,you may still claim the Maximum Pension Ex-clusion amount. However, only the pension,annuity, or IRA withdrawal of the qualifiedspouse may be excluded.

ExampleBen and Sara Lewis file a joint return for taxyear 2002. Mr. Lewis is 63 and receives a tax-able pension of $18,000. His wife is 60 yearsold, not disabled, and receives a taxable pensionof $8,000.


ExampleGeorge and Jane Adams file a joint return.George is 64 and receives taxable pension in-come of $6,900. Jane is 61, not disabled, andreceives taxable pension income of $8,000.

Actual Taxable Pension Income......... $14,900Less: Applicable Pension Exclusion .. $ 6,900Net Taxable Amount .......................... $ 8,000

Where the Maximum Pension Exclusion amountis not used, a taxpayer and/or spouse who is 62years of age may be able to use the balance ofthe Pension Exclusion to exclude additional in-come. See the instructions for the Other Retire-ment Income Exclusion, following.

Other Retirement IncomeExclusionIf you and/or your spouse are 62 years of age,you may be able to exclude other types of in-come (wages, interest, dividends, etc.) from yourtotal income. The Other Retirement Income Ex-clusion consists of two elements: (a) the un-claimed portion of your Pension Exclusion, and(b) an exclusion for taxpayers who are unable toreceive Social Security or Railroad Retirementbenefits. For purposes of this explanation wewill refer to the first part (unclaimed portion ofPension Exclusion) as the “Other RetirementIncome Exclusion” and the second part (exclu-sion for nonrecipients of Social Security orRailroad Retirement benefits) as the “SpecialExclusion.”

Both exclusions are claimed at the line on yourreturn labeled “Other Retirement Income Exclu-sion” (Line 28 of Form NJ-1040 or Line 14b,Column A and Column B of Form NJ-1040NR).Taxpayers who qualify may be able to claim boththe Other Retirement Income Exclusion and the


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Special Exclusion in addition to the Pension Ex-clusion. To calculate the total exclusion amountto which you are entitled, complete the OtherRetirement Income Exclusion Worksheet. SeeOther Retirement Income Exclusion Worksheeton page 15.

Unclaimed Pension ExclusionIf you and/or your spouse did not claim theMaximum Pension Exclusion amount to excludepension income, you may be able to use the un-claimed portion of your Pension Exclusion toexclude other types of income (wages, interest,dividends, etc.) on your return. You may haveclaimed less than the Maximum Pension Exclu-sion amount because your actual taxable pensionincome was less than the Maximum PensionExclusion amount for your filing status, orbecause you did not report any taxable pension,annuity, or IRA withdrawal income on yourreturn.

To qualify for the Other Retirement IncomeExclusion, you must satisfy all of the followingconditions:

1. You must be 62 years of age or more;and

2. Your earned income (total of: wages, netprofits from business, distributive share ofpartnership income, and net pro rata share ofS corporation income) must be $3,000 or less;

and3. You did not use the Maximum Pension

Exclusion amount (for tax year 2002:$17,500, $13,125, or $8,750, depending onfiling status).

The dollar amount of the Other RetirementIncome Exclusion differs from taxpayer to tax-payer, since it is the difference between your

actual taxable pension income and the Maxi-mum Pension Exclusion amount for your filingstatus.

NOTE: If you did not use the Pension Exclu-sion because you did not report anytaxable pension income on your return,you may still take advantage of theOther Retirement Income Exclusion ifyou meet the qualifications.

ExampleRobert Evans is 69 years old and single. For taxyear 2002 he received a $3,000 taxable pensionand claimed $3,000 as Pension Exclusion. Hisincome from wages, net profits from business,distributive share of partnership income, and netpro rata share of S corporation income totals$2,308. He qualifies for the Other RetirementIncome Exclusion.

Maximum Pension Exclusion ............ $13,125Less: Pension Exclusion claimed ....... $ 3,000Unused Pension Exclusion................. $10,125Other Retirement Income Exclusion .. $10,125

ExampleLinda Martin is over age 62 and her filing statusis head of household. She received a pension butreported $0 as taxable pension income for taxyear 2002 because she is using the Three-YearRule Method and is still recovering her pensioncontributions. Her income from wages, net prof-its from business, distributive share of partner-ship income, and net pro rata share of S corpora-tion income totals $2,675. She qualifies for theOther Retirement Income Exclusion.

Maximum Pension Exclusion ............ $13,125Less: Pension Exclusion claimed ....... $ 0Unused Pension Exclusion................. $13,125Other Retirement Income Exclusion .. $13,125

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ExampleAnn and Jim Anderson are both 63 years of ageand file a joint return. The Andersons do nothave any pension income. Their joint income fortax year 2002 from wages, business, distributiveshare of partnership income, and net pro ratashare of S corporation income totals $1,872.They qualify for the Other Retirement IncomeExclusion.

Maximum Pension Exclusion ............ $17,500Less: Pension Exclusion claimed ....... $ 0Unused Pension Exclusion................. $17,500Other Retirement Income Exclusion .. $17,500

ExamplePeter Johnson is 67 years old and his filingstatus is married, filing separate return. He re-ceived $10,000 in taxable pension income fortax year 2002 and claimed $8,750 as PensionExclusion.

Maximum Pension Exclusion .............. $8,750Less: Pension Exclusion claimed ......... $8,750Unused Pension Exclusion................... $ 0Other Retirement Income Exclusion .... $ 0

Peter does not qualify for the Other RetirementIncome Exclusion because the Maximum Pen-sion Exclusion amount has been applied to hispension.

ExampleArthur and Helen McCann file a joint return fortax year 2002. Both are over 62 years of age.Mr. McCann has a taxable pension of $6,200and he also earned $1,500 in net profits from hisbusiness. Mrs. McCann had wages of $2,306from her part-time job.

Maximum Pension Exclusion ............ $17,500Less: Pension Exclusion claimed ....... $ 6,200Unused Pension Exclusion................. $11,300Other Retirement Income Exclusion .. $ 0

The McCanns cannot take advantage of theOther Retirement Income Exclusion even thoughthey did not utilize their Maximum PensionExclusion of $17,500 because their joint incomefrom wages, net profits from business, distribu-tive share of partnership income and net prorata share of S corporation income is greaterthan $3,000.

When a married couple files a joint return, andonly one spouse is 62 years old, any PensionExclusion that was not claimed may be used asOther Retirement Income Exclusion providedthat (1) the joint earned income (total of: wages,net profits from business, distributive share ofpartnership income, and net pro rata share of Scorporation income) is $3,000 or less and(2) the exclusion is applied only to the incomeof the qualified (62-year-old) spouse.

ExampleMartha (age 58) and Eric (age 63) Peterson file ajoint return for tax year 2002. Martha receives ataxable pension of $5,000 and Eric receives ataxable pension of $3,000. Interest from theirjoint savings account totals $4,000. Eric haswages of $1,500 and Martha has wages of $500.

Maximum Pension Exclusion ............ $17,500Less: Pension Exclusion claimed ....... $ 3,000Unused Pension Exclusion................. $14,500Other Retirement Income Exclusion .. $ 3,500

In this example, only $3,500 of the $14,500unused Pension Exclusion may be utilized asOther Retirement Income Exclusion. The Peter-


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sons’ total income is $11,000 after Eric’s pen-sion has been excluded. Only $3,500 of the totalincome belongs to Eric, the spouse who is over62 ($1,500 wages and $2,000 interest). The bal-ance belongs to Martha ($500 wages, $2,000interest, and $5,000 pension). None of Martha’sincome can be excluded because she is not 62years old.

Special ExclusionIn addition to the Pension Exclusion and theOther Retirement Income Exclusion, NewJersey provides a Special Exclusion for thosetaxpayers who are:

1. 62 years of age or more;and

2. Unable to receive Social Security or Rail-road Retirement benefits, but who wouldhave been eligible for benefits had theybeen covered by either program.

You must work a minimum of 40 quarters withSocial Security coverage to be eligible to receiveSocial Security benefits. If you worked therequired amount of time but contributed to theSocial Security program for less than 40 quar-ters, you cannot receive Social Security benefitsand may be eligible for the Special Exclusion.

NOTE: Since most taxpayers will receiveSocial Security or Railroad Retirementbenefits, relatively few taxpayers areentitled to the Special Exclusion.

The requirements for the Special Exclusion areunrelated to those of the Pension and OtherRetirement Income Exclusions. If you qualifyfor the Special Exclusion, you may claim thisbenefit in addition to the Pension Exclusion and/

or Other Retirement Income Exclusion. Individ-uals who have contributed to the Social Securityor Railroad Retirement funds so that they wouldbe eligible to receive Social Security or RailroadRetirement benefits are not eligible for the Spe-cial Exclusion, regardless of whether they areactually collecting any benefits. Also, when ajoint return is filed, if one spouse is covered byeither the Social Security or the Railroad Retire-ment program, neither spouse is entitled toclaim the Special Exclusion.

Taxpayer(s) eligible for the Special Exclusionmay use one of the following amounts depend-ing on the filing status:

Married, filing joint return orHead of Household orQualifying Widow(er) ................ $6,000

Single orMarried, filing separate return.... $3,000

The Special Exclusion is also claimed on the“Other Retirement Income Exclusion” line onthe return (Line 28, Form NJ-1040 or Line 14b,Column A and Column B, Form NJ-1040NR).The Special Exclusion is added to any amountof unclaimed Pension Exclusion to arrive at thetotal for Line 28 or Line 14b. A married couplefiling jointly, if qualified, could exclude a totalof $23,500 in tax year 2002.

When a married couple files jointly and onlyone spouse is 62 or older, only the income of thespouse who is 62 or older may be excluded.

ExampleFred (age 65) and Clara (age 62) Smith are mar-ried and file a joint return for tax year 2002.Their combined taxable pension income is

Bulletin GIT-1

14 Rev. 12/02

$9,000, joint interest is $6,000, and dividendsare $2,000. The Smiths had no wages, businessprofits, partnership, or S corporation income.They are not covered by either the Social Secu-rity or Railroad Retirement programs, but theywould have been eligible for benefits if they hadbeen enrolled in either plan.

Maximum Pension Exclusion ............ $17,500Less: Pension Exclusion claimed ....... $ 9,000Unused Pension Exclusion................. $ 8,500Other Retirement Income Exclusion .. $ 8,500Special Exclusion ............................... $ 6,000

In this situation the total amount on the OtherRetirement Income Exclusion line (Line 28 orLine 14b) is $14,500 (total of $8,500 unclaimedportion of Pension Exclusion and $6,000 Spe-cial Exclusion).

ExampleAgatha Reilly is single and over age 65. Shecontributed to the Social Security program forover 30 years, but has chosen to delay receivingSocial Security benefits until age 70.

Agatha does not qualify for the Special Exclu-sion because she contributed to the Social Secu-rity fund so that she would be eligible to receiveSocial Security, despite the fact that she is notactually collecting any benefits.

Other Retirement Income ExclusionWorksheetIf you and/or your spouse are 62 years of age orolder, when you come to the line on your taxreturn labeled “Other Retirement Income Exclu-sion” (Line 28 of Form NJ-1040 or Line 14b ofForm NJ-1040NR), complete the Other Retire-ment Income Exclusion Worksheet to calculatethe total exclusion amount you are entitled to

claim here. Do not complete the worksheetunless you (or your spouse if you are filing ajoint return) are 62 or older. You do not qualifyfor the exclusions on the Other RetirementIncome Exclusion Worksheet unless you are 62years of age or older.

Part-Year Residents. If you were a New Jerseyresident for only part of the year, do not com-plete the Other Retirement Income ExclusionWorksheet. Instead, total the amount of earnedincome (wages, net profits from business, part-nership income, and S corporation income) youreceived for the entire year to determine whetheror not you qualify for the exclusion. For moreinformation, request Tax Topic Bulletin GIT-6,Part-Year Residents.


Rev. 12/02 15

Other Retirement Income Exclusion Worksheet* (tax year 2002)Age Requirement: 62 or older

Part I 1. Wages. Enter the amount reported on Line 14, Form NJ-1040(Line 35, Column A, Form NJ-1040NR) ...................................................... 1.

2. Net Profits From Business. Enter the amount reported on Line 17,Form NJ-1040 (Line 38, Column A, Form NJ-1040NR) .............................. 2.

3. Distributive Share of Partnership Income. Enter the amount reportedon Line 20, Form NJ-1040 (Line 43, Column A, Form NJ-1040NR)........... 3.

4. Net pro rata share of S Corporation Income. Enter the amount reportedon Line 21, Form NJ-1040 (Line 44, Column A, Form NJ-1040NR)........... 4.

5. Add lines 1, 2, 3, and 4.................................................................................. 5.STOP: If line 5 is MORE than $3,000 .......... Do not complete Part II. Enter “0” on

line 9 and continue with Part III.If line 5 is $3,000 or LESS ................. Continue with Part II.

Part II 6. Enter: if your filing status is:$17,500 Married, filing joint return$13,125 Single; Head of Household; Qualifying Widow(er)$ 8,750 Married, filing separate return................................................... 6.

7. Pension Exclusion claimed. Enter the amount from Line 19b, FormNJ-1040 (Pension Exclusion used to calculate amount on Line 42,Column A, Form NJ-1040NR) ...................................................................... 7.

8. Subtract line 7 from line 6. Enter the difference here and online 9 (Part III). If zero, enter “0”.................................................................. 8.

Part III 9. Unclaimed Pension Exclusion (from line 8) ............................................... 9.10a. Are you (and/or your spouse, if filing jointly) now receiving, or will you

(and/or your spouse, if filing jointly) ever be eligible to receive SocialSecurity or Railroad Retirement Benefits?! No — Continue with item 10b! Yes — Enter “0” on line 10 and continue with line 11

10b. Would you (and your spouse, if filing jointly) be receiving or ever beeligible to receive Social Security or Railroad Retirement Benefits if youhad participated in either program?! No — Enter “0” on line 10 and continue with line 11! Yes — Enter on line 10 the amount of exclusion for your

filing status shown below and continue with line 11Enter: if your filing status is:$6,000 Married, filing joint return; Head of Household;

Qualifying Widow(er)$3,000 Single; Married, filing separate return....................................... 10.

11. Other Retirement Income Exclusion. Add lines 9 and 10. Enter here andon Form NJ-1040, Line 28 (or Form NJ-1040NR, Line 14b, Column A andColumn B). If the amount here is zero, make no entry on Line 28, FormNJ-1040............................................................................................................... 11.

*Part-year residents/part-year nonresidents do not complete this worksheet. See instructions.

Bulletin GIT-1

16 Rev. 12/02

ExampleHarry Meehan is single and 66 years of age. He receives taxable pension income of $6,000 and usesthe Pension Exclusion to exclude this amount. Harry cannot receive Social Security, but he wouldhave been eligible for benefits if he had been covered by the program. His other income includes:$12,108 taxable interest, $981 dividends, $14,600 net profits from business, and $142 gambling win-nings. Harry completes the Other Retirement Income Exclusion Worksheet as follows:


Part I 1. Wages. Enter the amount reported on Line 14, Form NJ-1040(Line 35, Column A, Form NJ-1040NR) ....................................................................... 1. 0

2. Net Profits From Business. Enter the amount reported on Line 17,Form NJ-1040 (Line 38, Column A, Form NJ-1040NR) ............................................... 2. 14,600

3. Distributive Share of Partnership Income. Enter the amount reportedon Line 20, Form NJ-1040 (Line 43, Column A, Form NJ-1040NR) ............................ 3. 0

4. Net pro rata share of S Corporation Income. Enter the amount reported onLine 21, Form NJ-1040 (Line 44, Column A, Form NJ-1040NR) ................................. 4. 0

5. Add lines 1, 2, 3, and 4................................................................................................... 5. 14,600STOP: If line 5 is MORE than $3,000 — Do not complete Part II. Enter “0” on line 9 and continue with Part III.

If line 5 is $3,000 or LESS — Continue with Part II.

Part II 6. Enter: if your filing status is:$17,500 Married, filing joint return$13,125 Single; Head of Household; Qualifying Widow(er)$ 8,750 Married, filing separate return ....................................................................... 6.

7. Pension Exclusion claimed. Enter the amount from Line 19b, Form NJ-1040(Pension Exclusion used to calculate amount on Line 42, Col. A, Form NJ-1040NR) .. 7.

8. Subtract line 7 from line 6. Enter the difference here and online 9 (Part III). If zero, enter “0”................................................................................... 8.

Part III 9. Unclaimed Pension Exclusion (from line 8)................................................................. 9. 010a. Are you (and/or your spouse, if filing jointly) now receiving, or will you (and/or your

spouse, if filing jointly) ever be eligible to receive Social Security or RailroadRetirement Benefits?" No — Continue with item 10b! Yes — Enter “0” on line 10 and continue with line 11

10b. Would you (and your spouse, if filing jointly) be receiving or ever be eligible toreceive Social Security or Railroad Retirement Benefits if you had participated ineither program?! No — Enter “0” on line 10 and continue with line 11" Yes — Enter on line 10 the amount of exclusion for your

filing status shown below and continue with line 11Enter: if your filing status is:$6,000 Married, filing joint return; Head of Household; Qualifying Widow(er)$3,000 Single; Married, filing separate return........................................................... 10. 3,000

11. Other Retirement Income Exclusion. Add lines 9 and 10. Enter here and on FormNJ-1040, Line 28 (or Form NJ-1040NR, Line 14b, Column A and Column B). If theamount here is zero, make no entry on Line 28, Form NJ-1040...................................... 11. 3,000



Rev. 12/02 17

Harry did not claim the Maximum Pension Exclusion amount for his filing status ($13,125). He usedonly $6,000 to exclude his taxable pension. He cannot use the unclaimed portion of the Pension Ex-clusion ($7,125) to exclude other income shown on his return because his earned income (line 5 ofWorksheet) is more than $3,000. However, he is still entitled to claim the Special Exclusion ($3,000).

The income section of Harry Meehan’s New Jersey resident return for tax year 2002 looks like this:

14. Wages, salaries, tips, and other employee compensation (Enclose W-2)......................... 14 , , #

15a. Taxable interest income ..................................................................................................... 15a , 1 2 , 1 0 8#

0 0

15b. Tax-exempt interest income ....................................................... 15b , , #DO NOT include on Line 15a

16. Dividends ........................................................................................................................... 16 , , 9 8 1#

0 0

17. Net profits from business (Enclose copy of Federal Schedule C, Form 1040) .................. 17 , 1 4 , 6 0 0#

0 0

18. Net gains or income from disposition of property (Schedule B, Line 4) ............................. 18 , , #

19.Pensions,

a. Taxable Amount Received.............. 19a , 6 , 0 0 0#

0 0Annuitiesand IRA

b. Less N.J. Pension Exclusion.................................... 19b 6 , 0 0 0#

0 0Withdrawals

c. Subtract Line 19b from Line 19a ....................................................... 19c , , #

20. Distributive Share of Partnership Income (See instructions).............................................. 20 , , #

21. Net pro rata share of S Corporation Income (See instructions) ......................................... 21 , , #

22. Net gain or income from rents, royalties, patents & copyrights......................................................... 22 , , #(Schedule C, Line 3)

23. Net Gambling Winnings ..................................................................................................... 23 , , 1 4 2#

0 0

24. Alimony and separate maintenance payments received ................................................... 24 , , #

25. Other (See instructions) ..................................................................................................... 25 , , #

26. Total Income (Add Lines 14, 15a, 16, 17, 18, 19c, 20, 21, 22, 23, 24, and 25) ................. 26 , 2 7 , 8 3 1#

0 0

27. Total Income (From Line 26, page 1)................................................................................. 27 , 2 7 , 8 3 1#

0 0

28. Other Retirement Income Exclusion (See Worksheet and instructions)............................ 28 3 , 0 0 0#

0 0

29. New Jersey Gross Income (Subtract Line 28 from Line 27)............................................ 29 , 2 4 , 8 3 1#

0 0See instructions.

Bulletin GIT-1

18 Rev. 12/02

ExampleGeorge (age 69) and Louise (age 65) Pell are married and file a joint return. Both receive SocialSecurity. Their combined taxable pension income is $8,414 and they use the Pension Exclusion toexclude the entire amount on their return. They also received $11,800 taxable interest, $1,950 wages,$2,915 dividends, $850 in net pro rata share of S corporation income, and an $18,000 net gain fromthe sale of stock. The Pells complete the Other Retirement Income Exclusion Worksheet as follows:


Part I 1. Wages. Enter the amount reported on Line 14, Form NJ-1040(Line 35, Column A, Form NJ-1040NR) ....................................................................... 1. 1,950

2. Net Profits From Business. Enter the amount reported on Line 17,Form NJ-1040 (Line 38, Column A, Form NJ-1040NR) ............................................... 2. 0





Part II 6. Enter: if your filing status is:$17,500 Married, filing joint return$13,125 Single; Head of Household; Qualifying Widow(er)$ 8,750 Married, filing separate return ....................................................................... 6. 17,500

7. Pension Exclusion claimed. Enter the amount from Line 19b, Form NJ-1040(Pension Exclusion used to calculate amount on Line 42, Col. A, Form NJ-1040NR) .. 7. 8,414

8. Subtract line 7 from line 6. Enter the difference here and online 9 (Part III). If zero, enter “0”................................................................................... 8. 9,086

Part III 9. Unclaimed Pension Exclusion (from line 8)................................................................. 9. 9,08610a. Are you (and/or your spouse, if filing jointly) now receiving, or will you (and/or your

spouse, if filing jointly) ever be eligible to receive Social Security or RailroadRetirement Benefits?! No — Continue with item 10b" Yes — Enter “0” on line 10 and continue with line 11

10b. Would you (and your spouse, if filing jointly) be receiving or ever be eligible toreceive Social Security or Railroad Retirement Benefits if you had participated ineither program?! No — Enter “0” on line 10 and continue with line 11! Yes — Enter on line 10 the amount of exclusion for your

filing status shown below and continue with line 11Enter: if your filing status is:$6,000 Married, filing joint return; Head of Household; Qualifying Widow(er)$3,000 Single; Married, filing separate return........................................................... 10. 0




Rev. 12/02 19

The Pells complete the income section of their New Jersey resident return for tax year 2002 like this:

FORM NJ-1040

14. Wages, salaries, tips, and other employee compensation (Enclose W-2)......................... 14 , 1 , 9 5 0#

0 0

15a. Taxable interest income ..................................................................................................... 15a , 1 1 , 8 0 0#

0 0

15b. Tax-exempt interest income ....................................................... 15b , , #DO NOT include on Line 15a

16. Dividends ........................................................................................................................... 16 , 2 , 9 1 5#

0 0

17. Net profits from business (Enclose copy of Federal Schedule C, Form 1040) .................. 17 , , #

18. Net gains or income from disposition of property (Schedule B, Line 4) ............................. 18 , 1 8 , 0 0 0#

0 0

19.Pensions,

a. Taxable Amount Received.............. 19a , 8 , 4 1 4 # 0 0Annuitiesand IRA

b. Less N.J. Pension Exclusion.................................... 19b 8 , 4 1 4 # 0 0Withdrawals


20. Distributive Share of Partnership Income (See instructions).............................................. 20 , , #

21. Net pro rata share of S Corporation Income (See instructions) ......................................... 21 , , 8 5 0#

0 0


23. Net Gambling Winnings ..................................................................................................... 23 , , #



26. Total Income (Add Lines 14, 15a, 16, 17, 18, 19c, 20, 21, 22, 23, 24, and 25) ................. 26 , 3 5 , 5 1 5#

0 0

27. Total Income (From Line 26, page 1)................................................................................. 27 , 3 5 , 5 1 5#

0 0

28. Other Retirement Income Exclusion (See Worksheet and instructions)............................ 28 9 , 0 8 6#

0 0



Bulletin GIT-1

20 Rev. 12/02

ExampleMary and Pete Corcoran are married and file a joint return. Both are 70 years of age. Their joint incomeconsists of $19,806 in Social Security benefits, $8,039 taxable interest, $5,000 tax-exempt interest, $800in gambling winnings, $1,500 in partnership income, $1,000 in net pro rata share of S corporation in-come, and $98,607 net gain from the sale of their vacation home. Neither spouse receives a pension. TheCorcorans complete the Other Retirement Income Exclusion Worksheet as follows:


Part I 1. Wages. Enter the amount reported on Line 14, Form NJ-1040(Line 35, Column A, Form NJ-1040NR) ....................................................................... 1. 0


3. Distributive Share of Partnership Income. Enter the amount reportedon Line 20, Form NJ-1040 (Line 43, Column A, Form NJ-1040NR) ............................ 3. 1,500

4. Net pro rata share of S Corporation Income. Enter the amount reported onLine 21, Form NJ-1040 (Line 44, Column A, Form NJ-1040NR) ................................. 4. 1,000



Part II 6. Enter: if your filing status is:$17,500 Married, filing joint return$13,125 Single; Head of Household; Qualifying Widow(er)$8,750 Married, filing separate return ....................................................................... 6. 17,500

7. Pension Exclusion claimed. Enter the amount from Line 19b, Form NJ-1040(Pension Exclusion used to calculate amount on Line 42, Col. A, Form NJ-1040NR) .. 7. 0









Rev. 12/02 21

The Corcorans complete the income section of their New Jersey resident return for tax year 2002 likethis:

FORM NJ-1040

14. Wages, salaries, tips, and other employee compensation (Enclose W-2)......................... 14 , , #

15a. Taxable interest income ..................................................................................................... 15a , 8 , 0 3 9#

0 0

15b. Tax-exempt interest income ....................................................... 15b , 5 , 0 0 0#

0 0DO NOT include on Line 15a

16. Dividends ........................................................................................................................... 16 , , #

17. Net profits from business (Enclose copy of Federal Schedule C, Form 1040) .................. 17 , , #

18. Net gains or income from disposition of property (Schedule B, Line 4) ............................. 18 , 9 8 6 0 7#

0 0

19.Pensions,

a. Taxable Amount Received.............. 19a , , #Annuitiesand IRA

b. Less N.J. Pension Exclusion.................................... 19b , #Withdrawals


20. Distributive Share of Partnership Income (See instructions).............................................. 20 , 1 , 5 0 0#

0 0

21. Net pro rata share of S Corporation Income (See instructions) ......................................... 21 , 1 , 0 0 0#

0 0


23. Net Gambling Winnings ..................................................................................................... 23 , , 8 0 0#

0 0



26. Total Income (Add Lines 14, 15a, 16, 17, 18, 19c, 20, 21, 22, 23, 24, and 25) ................. 26 , 1 0 9 , 9 4 6#

0 0

27. Total Income (From Line 26, page 1)................................................................................. 27 , 1 0 9 , 9 4 6#

0 0

28. Other Retirement Income Exclusion (See Worksheet and instructions)............................ 28 1 7 , 5 0 0#

0 0



Bulletin GIT-1

22 Rev. 12/02

ExampleHerbert (age 66) and Marion (age 63) Green live in Nyack, New York. They are married and file ajoint return. Herbert is retired and received Social Security benefits of $12,478 and taxable annuityincome of $9,624. They also received $3,600 taxable interest, $7,100 in dividends and a $17,500 netgain from the sale of New Jersey real estate. Marion works in Englewood, New Jersey and earnedwages of $2,836. The Greens complete the Other Retirement Income Exclusion Worksheet as follows:


Part I 1. Wages. Enter the amount reported on Line 14, Form NJ-1040(Line 35, Column A, Form NJ-1040NR) ....................................................................... 1. 2,836






Part II 6. Enter: if your filing status is:$17,500 Married, filing joint return$13,125 Single; Head of Household; Qualifying Widow(er)$ 8,750 Married, filing separate return ....................................................................... 6. 17,500

7. Pension Exclusion claimed. Enter the amount from Line 19b, Form NJ-1040(Pension Exclusion used to calculate amount on Line 42, Col. A, Form NJ-1040NR) .. 7. 9,624









Rev. 12/02 23

The Greens complete Parts I and II on page 2, and Lines 14a–14c on page 1 of their New Jerseynonresident return for tax year 2002 as follows:

FORM NJ-1040NR (Page 2)

PART I TOTAL INCOMENet losses in one category cannot be applied againstincome in another. In case of a net loss in any category,enter “zero” for that category.

(Column A)AMOUNT OF

GROSS INCOME(EVERYWHERE)

(Column B)AMOUNT FROMNEW JERSEY

SOURCES35. Wages, salaries, tips, and other employee compensation ..................................... 35 2,836 2,83636. Interest................................................................................................................... 36 3,600 037. Dividends ............................................................................................................... 37 7,100 038. Net profits from business (Attach copy of Federal Schedule C, Form 1040) .......... 3839. Net gains or income from disposition of property (From Line 51) ........................... 39 17,500 17,50040. Net gains or income from rents, royalties, patents, and copyrights (From Line 54) 4041. Net Gambling winnings .......................................................................................... 4142. Pensions, Annuities and IRA Withdrawals, Less New Jersey Exclusion ................ 42 043. Distributive Share of Partnership Income............................................................... 4344. Net pro rata share of S Corporation Income........................................................... 4445. Alimony and separate maintenance payments received ........................................ 4546. Other—State Nature and Source ........................................................................... 4647. TOTAL INCOME (Add Lines 35 thru 46) (Enter here and on Line 14a, Page 1) ..... 47 31,036 20,336

PART II NET GAINS OR INCOME FROM List the net gains or income, less net loss, derived from the sale, exchange, or otherDISPOSITION OF PROPERTY disposition of property including real or personal whether tangible or intangible.

(a) Kind of property and description(b) Dateacquired

(Mo., day, yr.)

(c) Date sold(Mo., day, yr.)

(d) Gross salesprice

(e) Cost or other basisas adjusted(seeinstructions) andexpense of sale

(f) Gain or (loss)(d less e)

48. Six acre lot in Park Ridge, NJ 3/11/69 11/18/02 77,500 60,000 17,500

49. Capital Gains Distribution.......................................................................................................................... 4950. Other Net Gains ....................................................................................................................................... 5051. Net Gains (Add Lines 48, 49, and 50) (Enter here and on Line 39) (If Loss, enter ZERO)......................... 51 17,500

(Page 1)

NOTE: Retirement Income Exclusion is computed by completing the work-sheet in the instruction booklet.

(Column A)AMOUNT OF GROSS

INCOME (EVERYWHERE)

(Column B)AMOUNT FROM

NEW JERSEY SOURCES14a. Total Income (From Line 47, Part I) ............................................................. 14a 31,036 14a 20,33614b. Other Retirement Income Exclusion (See Worksheet and instructions) ....... 14b 7,876 14b 7,87614c. Gross Income (Subtract Line 14b from Line 14a)......................................... 14c 23,160 14c 12,460

Bulletin GIT-1

24 Rev. 12/02

For More InformationBy Phone• Call the Division of Taxation’s Customer

Service Center at 609-292-6400• TTY equipment users call 1-800-286-6613

(within NJ, NY, PA, DE, and MD) or609-984-7300 (anywhere)

Online• Division of Taxation Web site:

www.state.nj.us/treasury/taxation/• E-mail: [email protected]

In WritingNew Jersey Division of TaxationInformation and Publications BranchPO Box 281Trenton, NJ 08695-0281

Order Forms and Publications• Call the Forms Request System at

1-800-323-4400 (Touch-tone phones withinNJ, NY, PA, DE, and MD) or609-826-4400 (Touch-tone phones anywhere)

• Call NJ TaxFax at 609-826-4500 from yourfax machine’s phone

• Visit the Division of Taxation’s Web site:www.state.nj.us/treasury/taxation/

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