CCH Tax Day Report
New Jersey has enacted a new gross (personal) income tax credit for family caregivers of certain former armed service members with service-connected disabilities. The credit applies to tax years beginning on or after January 1, 2018 and is the lessor amount of: (a) 100% of the federal veteran disability compensation of a qualified armed service member for which the qualified family caregiver renders care or (b) $675.
If two or more qualified family caregivers qualify for the credit for the same qualified armed service member, the credit amount allowed will be allocated in proportion to each caregiver’s share of total care expenses provided for the tax year. If the credit reduces a qualified family caregiver’s tax liability for the tax year to zero, the remaining credit will be paid to the taxpayer as a refund of an overpayment of tax, but without interest. If a caregiver does not meet New Jersey’s filing thresholds to owe gross income tax for a tax year, the caregiver may still apply for a qualified veteran care credit using an application to be made available by the Director of the Division of Taxation. The qualified veteran care credit application will be due on the same date as the New Jersey gross income tax return.
To qualify for a credit, the legislation requires a caregiver to be related to the service member within the third degree or closer and to be an individual resident of New Jersey. The caregiver’s gross income may not exceed $100,000 as a joint filer or $50,000 as a single or separate filer.
The legislation requires the service member to be an individual who:
has a disability arising out of service in the active military or naval service of the United States in any war or conflict on or after September 11, 2001,
has been honorably discharged or released under conditions other than dishonorable,
meets the requirements for total disability ratings for compensation based upon unemployability of the individual as determined by the federal Department of Veterans Affairs, and
has resided with the caregiver in New Jersey for not less than six months of the year.
Ch. 67 (A.B. 450), Laws 2017, effective May 11, 2017, applicable to tax years on or after January 1, 2018