Did You Claim New Jersey Earned Income Tax Credit? If Not, You Can Still Do So

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With the tax filing deadline just days away, New Jersey families are encouraged to apply for a tax break – if they haven’t already. The tax break that is still available to low- and moderate-income workers is the New Jersey earned income tax credit (EITC). Eligible households could get an average of $825.

New Jersey earned income tax credit: what is it?

New Jersey’s Treasury Department reminds residents to apply for the state-funded tax break before the April 15 tax filing deadline. The credit was established about two decades ago and costs the state more than $450 million annually.

This tax credit is available to working residents who are at least 18 years old and meet the income limits. The New Jersey earned income tax credit is a refundable credit, i.e., recipients will get the balance credit as a refund even if their credit amount is larger than their tax liability.

New Jersey’s Earned Income Tax Credit program is among the most generous in the country, with an average credit of about $826. Eligible recipients can receive up to $2,972 annually in credit depending on their income and number of children. Those with no dependents can get up to $240.

Despite offering a significant amount of credit, many taxpayers eligible for the New Jersey Earned Income Tax Credit don’t apply for it. A Treasury press release issued a couple of months back noted that more than 200,000 taxpayers do not apply for the EITC. Thus, state officials are working to spread awareness about the New Jersey earned income tax credit.

“As residents prepare to file their taxes, Treasury encourages taxpayers to check the Division of Taxation’s NJEITC webpage to determine if they are eligible and take advantage of the program,” the press release said.

Focus on boosting state EITC

To qualify for the New Jersey earned income tax credit, a person must be at least 18 years old, be a New Jersey resident, meet income requirements, have a valid Social Security number and file a New Jersey Resident Income Tax Return. New Jersey follows the federal EITC income requirements for the state EITC.

Those who lived in New Jersey for only part of the year, their state EITC will depend on the number of months they were a New Jersey resident.

New Jersey’s EITC enjoys the support of both Democrats and Republicans. In 2018, Gov. Phil Murphy approved a phased-in expansion of the state credit, which currently is about 40% of the federal credit.

Now, lawmakers are even considering raising the state EITC to 45% of the federal credit, but this proposal is yet to receive a hearing in either House.

Also, in recent years, lawmakers have worked to expand the scope of the program to cover more workers. For instance, lawmakers recently lowered the minimum eligibility age to 18 years and expanded the upper age limit to 65 and older without dependents.