October 31st, 2013
If you’re a non-resident selling investment real estate in New Jersey, there’s a unique NJ tax you should be aware of. Both residents and non-residents always had to pay income tax on the gain upon the sale of real estate. This tax is required to be withheld for non-residents. The “Exit Tax”, which came into law six years ago, requires the seller to file a GIT/REP form (Gross Income Tax form) in order to record a Deed for the transfer of his property. When a non-resident sells the property, New Jersey will withhold this income tax in the amount of either 8.97 percent of the profit or 2 percent of the total selling price, whichever is higher. Therefore, even if the property is sold at a loss, tax must be withheld to fulfill the two percent requirement.
It’s important to realize that while the Exit Tax requires a substantial withholding, it doesn’t have any impact on the tax liability. If a taxpayer has excess withholding it would be prudent to file Form NJ1040 (individual) or NJ1041 (estate) quickly to expedite the recovery of the excess withholding.
July 9th, 2013
Whether an activity is classified as a business or a hobby can make a significant difference when it comes to taxes. Hobby losses are subject to “hobby loss rules”, under which the deductible expenses are limited to the amount of income generated by the activity. Even the expenses that can be deducted are subject to a 2% of adjusted gross income (AGI) floor. Deductions from business activity income, however, may exceed income and are fully deductible.
July 3rd, 2013
Beginning 2013, the Internal Revenue Service is offering a simplified method that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes.
June 28th, 2013
The Supreme Court’s ruling that a key component of the Defense of Marriage Act (DOMA) is unconstitutional was perceived by most as a victory for same-sex couples. The Court decided to leave the definition of a “marriage” to the States, 12 of which currently permit same-sex marriages. Same-sex couples living in one of those states will now be entitled to the same federal benefits as traditional couples. The 12 states include NY and all of the New England states, MD and DE. This has many far-reaching implications.
June 10th, 2013
After Hurricane Sandy hit, the NJ Division of Taxation was flooded (no pun intended) with inquiries regarding the taxability of repairs. As a result, a helpful “Sales and Use Tax – Frequently Asked Questions” page has been added to its website. This article has the answers, including whether charges for demolition services or tree removal are subject to tax.
January 15th, 2013
Urbach & Avraham will be hosting a Constant Contact seminar on Tuesday, Februaury 5, 2013.
December 12th, 2012
Unless NJ repays the loan in 2013, the penalty tax will increase again to 0.9% for 2013. You might want to budget for this in your April, July and October 2013 FUTA payments.
November 12th, 2012
Hurricane Sandy has been designated as a qualified disaster by the IRS for federal tax purposes. As a result, qualified disaster relief payments made to individuals by their employer can be excluded from taxable income.
November 5th, 2012
In the aftermath of Hurricane Sandy, the IRS have taken action to aid those affected by the storm. It has postponed various tax filing and payment deadlines.
November 5th, 2012
As a result of the difficulties faced by taxpayers in the aftermath of Hurricane Sandy, the State of New Jersey has announced that filing deadlines will be extended for returns and payments that would have been due October 30 and 31. The new deadline will be November 7, 2012.