Virginia to New Jersey income tax

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communipaw
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Virginia to New Jersey income tax

Post by communipaw » Mon Nov 06, 2017 5:22 pm

I'm considering a move from which most people consider a medium tax state, Virginia, to what is called a high tax state, New Jersey, where almost all my family is.

I realize there are many things such as car registration fees, car taxes, real estate taxes, exemption of federal pensions, etc. that enter into the equation.

But right now I'm looking to see with my current income how New Jersey state income tax compares to my Virginia state income tax. Does anyone know of a website that allows you to enter in your total Federal income and see a comparison between two states?

I realize there are benefits such as reduced taxes if you have a low income, if you're blind, etc. etc. But at this point I'm just looking to get a general idea of how small or how gigantic a jump I would have in my state income taxes, if I move from Virginia to New Jersey. Thank you

Good Listener
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Re: Virginia to New Jersey income tax

Post by Good Listener » Mon Nov 06, 2017 7:18 pm

Very simple. NJ is a gross income tax state. The only deductions allowed are 1500 for a taxpayer and 1k for dependents and real estate taxes (or 18% of rent) up to 10k, period.... If the total is over 75k, it is 6.37% times the amount minus $2126. If over 500k, then you enter a marginal 8.97%. We have no pending legislation but the guy likely to be elected governor tomorrow, Murphy, is promising a "millionaires tax". Last time we had a millionaires tax it started at 500k. But it's not an overwhelming tax burden like California at least.

duckcalldan
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Re: Virginia to New Jersey income tax

Post by duckcalldan » Mon Nov 06, 2017 7:59 pm

communipaw wrote:
Mon Nov 06, 2017 5:22 pm
I'm considering a move from which most people consider a medium tax state, Virginia, to what is called a high tax state, New Jersey, where almost all my family is.

I realize there are many things such as car registration fees, car taxes, real estate taxes, exemption of federal pensions, etc. that enter into the equation.

But right now I'm looking to see with my current income how New Jersey state income tax compares to my Virginia state income tax. Does anyone know of a website that allows you to enter in your total Federal income and see a comparison between two states?

I realize there are benefits such as reduced taxes if you have a low income, if you're blind, etc. etc. But at this point I'm just looking to get a general idea of how small or how gigantic a jump I would have in my state income taxes, if I move from Virginia to New Jersey. Thank you
Try this: http://www.tax-rates.org/income-tax-cal ... ?ref=index. It worked great when I was comparing several possible states to move to when we’re empty nesters.

Zott
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Re: Virginia to New Jersey income tax

Post by Zott » Mon Nov 06, 2017 10:55 pm

duckcalldan wrote:
Mon Nov 06, 2017 7:59 pm
communipaw wrote:
Mon Nov 06, 2017 5:22 pm
I'm considering a move from which most people consider a medium tax state, Virginia, to what is called a high tax state, New Jersey, where almost all my family is.

I realize there are many things such as car registration fees, car taxes, real estate taxes, exemption of federal pensions, etc. that enter into the equation.

But right now I'm looking to see with my current income how New Jersey state income tax compares to my Virginia state income tax. Does anyone know of a website that allows you to enter in your total Federal income and see a comparison between two states?

I realize there are benefits such as reduced taxes if you have a low income, if you're blind, etc. etc. But at this point I'm just looking to get a general idea of how small or how gigantic a jump I would have in my state income taxes, if I move from Virginia to New Jersey. Thank you
Try this: http://www.tax-rates.org/income-tax-cal ... ?ref=index. It worked great when I was comparing several possible states to move to when we’re empty nesters.
Many states (including NJ) have preferences for retirement income, and I believe that this calculator doesn't take these into account. I'm sure there are other particularities that it can't take into account as well. I think the best thing is to go to each state's website and download the personal income tax form and instructions and work through them. It's a bit time-consuming, but state taxes aren't nearly as complex as federal. And if you're only looking at two states, it's a reasonable effort to make.

carolinaman
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Re: Virginia to New Jersey income tax

Post by carolinaman » Tue Nov 07, 2017 7:19 am

I suggest you consider also property tax and sales tax in addition to income tax. You may find the cumulative effect of all 3 are significant. I believe that NJ is considered one of the highest taxed states in US and this is likely to show up in different taxes but especially in these 3.

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TomatoTomahto
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Re: Virginia to New Jersey income tax

Post by TomatoTomahto » Tue Nov 07, 2017 7:35 am

carolinaman wrote:
Tue Nov 07, 2017 7:19 am
I suggest you consider also property tax and sales tax in addition to income tax. You may find the cumulative effect of all 3 are significant. I believe that NJ is considered one of the highest taxed states in US and this is likely to show up in different taxes but especially in these 3.
Yes. And, in addition to paying $40k in property taxes (the exact amount has been going up and down recently), my street is deemed "Private," which means that I get to chip in $4k for my share of the milling and paving of the street (wrote the check yesterday). They literally get you coming and going.

Don't expect that the high taxes will result in great services. NJ Transit is a horrible joke, the roads have potholes that keep the repair shops in business, and I'm sure that I'm not the only one who can't wait to leave. It's not even that convenient for commuting into NYC any more. The state is being bled dry.

That said, the people of NJ are much better than their reputation. Good luck.

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buccimane
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Re: Virginia to New Jersey income tax

Post by buccimane » Tue Nov 07, 2017 9:00 am

As mentioned above, if you haven't commuted in NJ yet I would give it a trial run.. Northern NJ is brutal. To answer one of your questions, I just registered my 4 door sedan for $60.

Good luck!
A man convinced against his will is of the same opinion still

bsteiner
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Re: Virginia to New Jersey income tax

Post by bsteiner » Tue Nov 07, 2017 9:21 am

You can calculate the income tax with whatever software you use to do your income tax returns, or you can have your accountant do it, or you can pull up the New Jersey income tax forms online and calculate it by hand.

You can get an estimate of the sales tax from the instructions to the Federal income tax return. Note that the New Jersey sales tax rate is scheduled to drop from 6.875% to 6.625% in 2018.

Real estate taxes in New Jersey tend to be high, though they vary depending on the property and the municipality.

communipaw
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Re: Virginia to New Jersey income tax

Post by communipaw » Tue Nov 07, 2017 1:34 pm

Thanks to all of you for your information.

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grabiner
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Re: Virginia to New Jersey income tax

Post by grabiner » Sat Nov 11, 2017 12:21 am

Good Listener wrote:
Mon Nov 06, 2017 7:18 pm
Very simple. NJ is a gross income tax state. The only deductions allowed are 1500 for a taxpayer and 1k for dependents and real estate taxes (or 18% of rent) up to 10k, period.
And medical expenses in excess of 2% of income.

NJ also taxes some categories of income not taxed in most states:
Medical insurance paid by payroll deduction is taxed (but it usually winds up getting deducted because of the 2% rule).
HSAs are not recognized; contributions are not deductible, and income in the HSA is taxable unless it comes from Treasury bonds.
Traditional IRA contributions are never deductible; prefer Roth IRAs.
401(k) contributions are deductible, but not contributions to other retirement plans such as 403(b)s; consider Roth accounts if your employer offers them.
David Grabiner

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Re: Virginia to New Jersey income tax

Post by Gray » Sat Nov 11, 2017 2:41 am

I think the outcome of this tax legislation will have a significant impact on your decision. If it doesn’t get passed by next fall and the House or Senate changes hands, it becomes less of an issue. I personally hope it doesn’t happen.

(Not talking about the substance of it)

Billavoider
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Re: Virginia to New Jersey income tax

Post by Billavoider » Sat Nov 11, 2017 11:13 am

While I currently live and work in NJ, when I retire I am planning to exodus the state like so many retirees. High taxes and cold weather are the main culprits.

During last year, there was a change to taxing retirement income; however, there is a limit on the retirement income. Sales tax was cut 1/8% with another 1/8% cut upcoming.

NJ and Maryland were the only two states to have an estate tax and inheritance tax. One of those changes, along with the taxing retirement income, was to phase out the estate tax.

NJ is making strides to correct the problem, but the property tax issue remains a obstacle.

JCE66
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Re: Virginia to New Jersey income tax

Post by JCE66 » Sat Nov 11, 2017 11:58 am

communipaw....The 'where' in NJ really matters here. It would help if you named a town or township. Why? Because there are huge differences in terms of property taxation.

Example: I lived in Rutherford, NJ (Bergen County) for some time. Talk about high property tax....OY!!! I then relocated to South Jersey (Burlington county), and while the towns are very comparable in terms of quality and schools....the property taxes here in South Jersey are significantly lower. The 'where' really does matter.

My advice would be to consider PA, if at all possible. Lower property and income taxes. That 30 minute difference in driving time might be worth thousands of dollars annually. It is something to consider very seriously.

I would also add - NJ state finances are a real mess.

BigoteGato
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Re: Virginia to New Jersey income tax

Post by BigoteGato » Sat Nov 11, 2017 3:00 pm

Re: taxes- RE taxes will be higher. I went from $7K to $11K for smaller place. Vehicle tax in VA much higher. Over $1K for nice new car vs. regular registration ~$100+ in NJ. But car insurance higher in NJ. Traffic in NJ not as bad as northern VA. Of course, exact location in each state will make large difference.
Central NJ schools are better (IMO) than average VA schools (except TJ).
Quality of life will be very different in several ways but you didn’t ask about that.

communipaw
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Re: Virginia to New Jersey income tax

Post by communipaw » Wed Nov 15, 2017 5:54 pm

mmunipaw....The 'where' in NJ really matters here. It would help if you named a town or township. Why? Because there are huge differences in terms of property taxation.

Example: I lived in Rutherford, NJ (Bergen County) for some time. Talk about high property tax....OY!!! I then relocated to South Jersey (Burlington county), and while the towns are very comparable in terms of quality and schools....the property taxes here in South Jersey are significantly lower. The 'where' really does matter.

My advice would be to consider PA, if at all possible. Lower property and income taxes. That 30 minute difference in driving time might be worth thousands of dollars annually. It is something to consider very seriously.

I would also add - NJ state finances are a real mess.
I'm just beginning my research, but I still should have added in: am single, retired with a federal pension. am taking RMDs, have Vanguard dividends and capital gains which I've been automatically reinvesting , PROBABLY will rent rather than own, and would likely be somewhere between Tom's River [Ocean County] and Freehold [Monmouth County.

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grabiner
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Re: Virginia to New Jersey income tax

Post by grabiner » Wed Nov 15, 2017 8:40 pm

communipaw wrote:
Wed Nov 15, 2017 5:54 pm
I'm just beginning my research, but I still should have added in: am single, retired with a federal pension. am taking RMDs, have Vanguard dividends and capital gains which I've been automatically reinvesting , PROBABLY will rent rather than own, and would likely be somewhere between Tom's River [Ocean County] and Freehold [Monmouth County.]
Your state tax on the RMDs will be lower; NJ treats all IRAs as non-deductible, so unless your IRA was a rollover from a 401(k) (which has been deductible in NJ for years), you will pay tax only on the gains.

Similarly, are you drawing payments from the TSP? NJ does not allow a deduction for TSP contributions, so when you withdraw from the TSP (or an IRA rolled over from the TSP), you pay tax only on the gains and the government's contribution, not on the amount you contributed.
David Grabiner

JCE66
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Re: Virginia to New Jersey income tax

Post by JCE66 » Thu Nov 16, 2017 10:10 am

...somewhere between Tom's River [Ocean County] and Freehold [Monmouth County.
You might want to consider going a little further south. Ocean and Monmouth have fairly high property taxes, particularly when you get close to the shore. Have you considered Atlantic, Burlington or Camden counties? What is comes down to is how close (or far) you want to be from your family.

Right now, in Atlantic City, there is a truly historic buying opportunity. The city is in dire financial straits (casinos closing), and people are leaving. It is something to consider, as there is a train direct to Philly.

It sounds like from your last post you have 'won the game' - nice job. :happy

Good Listener
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Re: Virginia to New Jersey income tax

Post by Good Listener » Thu Nov 16, 2017 5:22 pm

grabiner wrote:
Wed Nov 15, 2017 8:40 pm
communipaw wrote:
Wed Nov 15, 2017 5:54 pm
I'm just beginning my research, but I still should have added in: am single, retired with a federal pension. am taking RMDs, have Vanguard dividends and capital gains which I've been automatically reinvesting , PROBABLY will rent rather than own, and would likely be somewhere between Tom's River [Ocean County] and Freehold [Monmouth County.]
Your state tax on the RMDs will be lower; NJ treats all IRAs as non-deductible, so unless your IRA was a rollover from a 401(k) (which has been deductible in NJ for years), you will pay tax only on the gains.

Similarly, are you drawing payments from the TSP? NJ does not allow a deduction for TSP contributions, so when you withdraw from the TSP (or an IRA rolled over from the TSP), you pay tax only on the gains and the government's contribution, not on the amount you contributed.
Wow!!! I did not do an RMD as I am too young but I did big Roth conversions this year. Will TurboTax know to not tax this if it is real considered pre-tax? Some but not all of it came from a 401k.? And would be very hard for me to know how much.

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grabiner
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Re: Virginia to New Jersey income tax

Post by grabiner » Thu Nov 16, 2017 9:17 pm

Good Listener wrote:
Thu Nov 16, 2017 5:22 pm
grabiner wrote:
Wed Nov 15, 2017 8:40 pm
Your state tax on the RMDs will be lower; NJ treats all IRAs as non-deductible, so unless your IRA was a rollover from a 401(k) (which has been deductible in NJ for years), you will pay tax only on the gains.

Similarly, are you drawing payments from the TSP? NJ does not allow a deduction for TSP contributions, so when you withdraw from the TSP (or an IRA rolled over from the TSP), you pay tax only on the gains and the government's contribution, not on the amount you contributed.
Wow!!! I did not do an RMD as I am too young but I did big Roth conversions this year. Will TurboTax know to not tax this if it is real considered pre-tax? Some but not all of it came from a 401k.? And would be very hard for me to know how much.
TurboTax certainly doesn't know the right number, but you can adjust the number yourself. You need to know how much you contributed from money that was subject to NJ tax: traditional IRA contributions, and contributions to non-401(k) retirement plans. If you convert only part of the IRA, you prorate, just as you do if you made non-deductible IRA contributions

When this applied to me in 2012, TurboTax asked me to enter the NJ basis of the IRA I converted, rather than copying the federal number. TaxAct did not ask in 2011 or 2013, so if I didn't already know the NJ law, I would have paid too much NJ tax in 2011; I adjusted it manually. (In 2013, the basis was the same, because I made a non-deductible IRA contribution and then converted it.)

But to get the right number, I needed to go back to my old records; this is why I advise saving your tax form (but not supporting documents) forever. In 1997-2001, I contributed to 403(b) plans in states other than NJ. I rolled those 403(b) plans into an IRA, and converted that IRA to a Roth IRA in 2010, using the special rule that you could pay the tax on the conversion in 2011 and 2012. Thus, to get the correct number for my 2011 and 2012 NJ tax, I needed my 1997 W-2, which showed how much I had contributed to the 403(b).
David Grabiner

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Ged
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Re: Virginia to New Jersey income tax

Post by Ged » Thu Nov 16, 2017 10:50 pm

Recent changes in NJ income and estate tax laws are a big help to many retirees in NJ. How much it will help you depends a LOT on your income level. In any case real estate tax is a serious downside.

BTW I live in Freehold. There are potential long term issues with the growth of Lakewood, which is a couple of towns away. You should do some research on it before deciding where to live.

Good Listener
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Re: Virginia to New Jersey income tax

Post by Good Listener » Fri Nov 17, 2017 7:28 pm

grabiner wrote:
Thu Nov 16, 2017 9:17 pm
Good Listener wrote:
Thu Nov 16, 2017 5:22 pm
grabiner wrote:
Wed Nov 15, 2017 8:40 pm
Your state tax on the RMDs will be lower; NJ treats all IRAs as non-deductible, so unless your IRA was a rollover from a 401(k) (which has been deductible in NJ for years), you will pay tax only on the gains.

Similarly, are you drawing payments from the TSP? NJ does not allow a deduction for TSP contributions, so when you withdraw from the TSP (or an IRA rolled over from the TSP), you pay tax only on the gains and the government's contribution, not on the amount you contributed.
Wow!!! I did not do an RMD as I am too young but I did big Roth conversions this year. Will TurboTax know to not tax this if it is real considered pre-tax? Some but not all of it came from a 401k.? And would be very hard for me to know how much.
TurboTax certainly doesn't know the right number, but you can adjust the number yourself. You need to know how much you contributed from money that was subject to NJ tax: traditional IRA contributions, and contributions to non-401(k) retirement plans. If you convert only part of the IRA, you prorate, just as you do if you made non-deductible IRA contributions

When this applied to me in 2012, TurboTax asked me to enter the NJ basis of the IRA I converted, rather than copying the federal number. TaxAct did not ask in 2011 or 2013, so if I didn't already know the NJ law, I would have paid too much NJ tax in 2011; I adjusted it manually. (In 2013, the basis was the same, because I made a non-deductible IRA contribution and then converted it.)

But to get the right number, I needed to go back to my old records; this is why I advise saving your tax form (but not supporting documents) forever. In 1997-2001, I contributed to 403(b) plans in states other than NJ. I rolled those 403(b) plans into an IRA, and converted that IRA to a Roth IRA in 2010, using the special rule that you could pay the tax on the conversion in 2011 and 2012. Thus, to get the correct number for my 2011 and 2012 NJ tax, I needed my 1997 W-2, which showed how much I had contributed to the 403(b).

Thank you David. I can only estimate at best with no documentation. Too risky to try as this would likely be a red flag for them to audit it, right?

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