Screen NJAdj-2 - New Jersey Exclusions and Deductions (1040)

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Overview

Use this screen to enter exclusions and deductions allowed on the New Jersey returns. Income and adjustments are entered in the NJAdj screen.

Retirement Exclusions

Use this section to enter information for the retirement exclusion calculated on the Pension / Other Retirement Exclusion Worksheet. Indicate if the taxpayer or spouse is eligible to receive Social Security or railroad benefits and if not, if they would have participated in the programs if eligible. If only 1 spouse qualified for retirement exclusion, use the
Adjustment to qualifying person's income when only one spouse qualifies
field to enter the qualified taxpayer's total qualified income.

Education Deductions

Use this section to enter information for the New Jersey College Affordability Deductions.
NJBEST deduction
New Jersey Better Educational Savings Trust data entry on the federal 1099Q screen using State use code 24. Deduction is limited to $10,000.
NJCLASS deduction
The New Jersey College Loans to Assist State Students starts with data entry on the federal Educate screen, Qualified education loan interest paid in 2022. This data transfers to the NJAdj-2 screen NJCLASS deduction where the principal portion of the loan may be added. Deduction is limited to $2,500.
NJ Higher Ed Tuition Deduction
New Jersey Higher Educational Deduction is for college tuition paid to New Jersey institutes. Colleges located in New Jersey entered on the federal Educate screen, Eligible student information statement window. Deduction is limited to $10,000.
Married filing separate returns taxpayer portion of the education deductions
Married filing separate taxpayers may split educational expenses in any fashion between the taxpayer and the spouse. Use these fields to indicate the amount that should be reported on the taxpayer's return.

Deductions

Use this section to enter deductions from New Jersey income.
Medical expenses
Medical expenses transfer from the federal return per New Jersey state law. The Unreimbursed expenses are limited to the amount that exceeds 2 percent of New Jersey gross income. Use the force fields if you disagree with the calculated amounts. See Medical Expense Worksheet for the amount of medical expense that is reported on the return. For part-year and nonresident part-year return, the expenses that calculate from the federal return are prorated by the number of months of residency per New Jersey instructions. Force fields aren't prorated.
For medical portion of IRC 125 benefits reported in box 14 on a W2, use code
25
to have the amount added to the federal Schedule A medical expenses.
Qualified conservation contribution
Enter the amount of any contribution made for conservation purposes of a qualified real property interest located in New Jersey allowed as a deduction in calculating the federal taxable income. Other deduction appearing on Form NJ-1040 or NJ-1040NR can be adjusted as follows:
Alimony payments
are transferred from federal data entry, the total of which can be viewed and adjusted on the New Jersey Gross Income Worksheet.
Health enterprise zone deduction
If the taxpayer has a health enterprise zone deduction from sole proprietary or pass-through activities, enter the amount.
Organ/Bone Marrow Donation
2025
expenses
Enter detail on person donating and the expenses incurred by the taxpayer for donating an organ or bone marrow. Deduction limited to $10,000 per person donating.

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