We have $204,000 in income. Can we qualify for the pension exclusion?

Q. Do my spouse and I qualify for the pension exclusion? We are both over age 62, and last year we earned: $75,000 from IRA/401(k) distributions, $25,000 from a Roth IRA distribution, $64,000 in Social Security, $30,000 in capital gains from a brokerage account and $10,000 from dividends and interest. — Retired A. Nope. you don't qualify for the pension exclusion. That’s because you have too much income. To qualify for the pension exclusion, you must have less than $100,000 of gross income for New Jersey purposes. Let’s take a closer look. Overall, you have $204,000 of income, but the IRS and the State of New Jersey won’t tax all of it, said Bernie Kiely, a certified financial planner and ce

This part of the pension exclusion is unfair, taxpayer says

Q. I filed my father’s taxes and they only allowed me to exclude his $39,600 pension. In reading the pension exclusion rules further, it seems that you are allowed to exclude the lesser of your pension or $45,000 of retirement income? It seems a little unfair to those who are making less – he had to still pay taxes on $8,000 of income. Is this the correct interpretation of the law? — Trying to help A. New Jersey has two income exclusions for senior citizens when they file their state income taxes. The first income exclusion is the Pension or Retirement Income Exclusion. For 2018 the exclusion is $60,000 for those married filing jointly, $30,000 for those married filing separately and $45,000

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Kiely Capital Management offers financial planning and investment advice. Serving Central and Northern New Jersey, Yvonne and Bernard (Bernie) Kiely provide over 25 years of experience offering discretionary asset management, retirement planning and income tax preparation. KCM is registered with the State of New Jersey as a Registered Investment Advisor.

 

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