Special payments or rebates issued by Georgia, Massachusetts, South Carolina, and Virginia in 2022 to New Jersey residents are considered refunds of state taxes paid to that state. These refunds may impact a New Jersey resident's credit for taxes paid to other jurisdictions taken on a prior year's New Jersey Resident Income Tax Return (Form NJ-1040).
The Massachusetts payment may affect many New Jersey residents. Chapter 62F is a Massachusetts law that requires that state's Department of Revenue to issue a credit to taxpayers if total tax revenues in a given fiscal year exceed an annual cap tied to wage and salary growth in Massachusetts. In fiscal year 2022, Chapter 62F required Massachusetts to return excess tax revenue to both resident and nonresident taxpayers. In general, resident and nonresident taxpayers received a refund equal to 14.0312% of their personal income tax liability in Massachusetts for Tax Year 2021. We anticipate that refunds resulting from Chapter 62F could impact a New Jersey resident's Massachusetts credit for taxes paid to other jurisdictions on the 2021 NJ-1040. If a New Jersey resident taxpayer took a Massachusetts credit for taxes paid to other jurisdictions, the Chapter 62F refund will reduce the amount of previously reported tax paid to Massachusetts. In certain situations this could result in a required adjustment to the Massachusetts credit for taxes paid to other jurisdictions claimed on the New Jersey resident's 2021 NJ-1040. Taxpayers impacted should amend their 2021 NJ-1040 returns as soon as possible in order to minimize interest impact.
For payments or rebates issued from the states of Georgia, South Carolina, and Virginia, taxpayers impacted should also amend their prior year NJ-1040 returns as soon as possible in order to minimize interest impact.
This advice pertains to rebates or refunds of other state taxes paid to New Jersey residents in tax years before and after 2021 as well.
For general information, see the IRS website.
For more information on the specific states’ rebate programs, see: