Official Site of The State of New Jersey

Complete Worksheet D in the NJ-1040 instructions to determine whether or not you qualify to take the Other Retirement Income Exclusion, and, if so, to calculate the amount to include on the tax return. (Part-year residents must use Worksheet E for their calculation. Non-residents must use the Other Retirement Income Worksheet in the NJ-1040-NR.)

You should only complete the worksheet if:

• You (and/or your spouse/civil union partner, if filing jointly) were 62 or older on the last day of the tax year; and
• Your total income for the entire year was $150,000 or less; and
• Your income from wages, net profits from business, distributive share of partnership income, and net pro rata share of S corporation income totals $3,000 or less.

This exclusion is for taxpayers who cannot receive Social Security or Railroad Retirement benefits. Very few taxpayers are eligible to use the special exclusion, since most taxpayers qualify for those benefits. If you do qualify, you can claim this benefit even if you used your maximum pension exclusion.

• You (and/or your spouse/civil union partner, if filing jointly) were 62 or older on the last day of the tax year; and
• You (and your spouse/civil union partner, if filing jointly) cannot receive Social Security or Railroad Retirement benefits, but you would have been eligible for benefits if you had fully participated in either program. (Some people cannot participate in these benefit programs because their employer did not participate in them.)

You must claim the special exclusion on the Other Retirement Income Exclusion line on the return, along with any unclaimed pension exclusion you may be claiming. Add the special exclusion amount to any amount of unclaimed pension exclusion to arrive at the total for this line. Full-year residents should complete Worksheet D in the NJ-1040 instructions to calculate their Other Retirement Income Exclusion amount to report. Part-year residents must use Worksheet E. (Non-residents must use the Other Retirement Income Worksheet in the NJ-1040-NR.)

You qualify for the pension exclusion if:

• You (and/or your spouse/civil union partner, if filing jointly) were 62 or older or disabled as defined by Social Security guidelines on the last day of the tax year (December 31 for calendar year filers); and
• Your total income for the entire year was $100,000 or less.

If you qualify, you can claim the lesser of your actual taxable pension income or the maximum pension exclusion amount for your filing status (see chart below).

When you and your spouse/civil union partner file a joint return and only one of you is 62 or older or disabled, you can still claim the maximum pension exclusion. However, you can exclude only the pension, annuity, or IRA withdrawal of the qualified spouse/civil union partner.

You may be able to exclude other types of income (wages, interest, dividends, etc.) from your total income. There are two parts to these exclusions, and each part has different eligibility requirements:

Unclaimed Pension Exclusion. If you did not use the maximum pension exclusion amount for your filing status, you qualify to use the unclaimed portion if:

• You (and/or your spouse/civil union partner, if filing jointly) were 62 or older on the last day of the tax year; and
• Your total income for the entire year was $100,000 or less; and
• Your income from wages, net profits from business, distributive share of partnership income, and net pro rata share of S corporation income totals $3,000 or less.

When you and your spouse/civil union partner file a joint return and only one of you is 62 or older, you can exclude only the income of the qualified spouse/civil union partner.

Special Exclusion. This exclusion is for taxpayers who cannot receive Social Security or Railroad Retirement benefits. Since most taxpayers qualify for those benefits, few taxpayers are eligible to use the special exclusion. If you qualify, you can claim this benefit even if you used your maximum pension exclusion. You qualify if:

• You (and/or your spouse/civil union partner, if filing jointly) were 62 or older on the last day of the tax year; and
• You (and your spouse/civil union partner, if filing jointly) cannot receive Social Security or Railroad Retirement benefits, but you would have been eligible for benefits if you had fully participated in either program.

The special exclusion is claimed on the Other Retirement Income Exclusion line on the return, along with any unclaimed pension exclusion you may be claiming. You must add the special exclusion amount to any amount of unclaimed pension exclusion to arrive at the total for this line. Full-year residents should complete Worksheet D in the NJ-1040 instructions to calculate their Other Retirement Income Exclusion amount to report. Part-year residents must use Worksheet E. (Non-residents must use the Other Retirement Income Worksheet in the NJ-1040-NR.)