Empirically - NJ Property Taxes have Skyrocketed (its not just you)

Category: Tax Law and Planning

From the New Jersey Star Ledger January 7, 2007:

Property taxes balloon despite push to reform: "As lawmakers scrambled to enact a property tax reform plan last year, the problem grew by a record $1.4 billion, a Star-Ledger analysis has found.

Local government agencies hit landowners with a $20.9 billion levy in 2006, of which $15.4 billion was billed to homeowners. That pushed the average residential tax bill up 6.8 percent to $6,170 -- an increase of $390.

In the mid-1990s, the state's property tax levy -- the total amount collected to run local government and schools -- took three years to rise by a similar amount. But with costs increasing and aid from Trenton relatively flat, local officials have passed more than a billion dollars of their costs onto landowners every year since 2002.

The largest increase prior to 2006 was $1.2 billion in 2003."

snip

"In 2000, only six communities had an average property tax bill over $10,000. Now, homeowners in 55 towns can expect to pay five-figures to support schools, police and other local services, according to the analysis."

A proposed solution is: "The short-term fix is a tax credit of up to 20 percent for those earning $100,000 or less, with smaller reductions for those earning between $100,000 and $250,000." However, the dollar limitations on income are likely to mean that those with the 5 figure tax bills will not see any real relief.

Retirement Accounts and Beneficiary Designations - Myths and Misconceptions

Category: Estate Planning, Tax Law and Planning

At the start of the new year, many people take a look at their qualified retirement plans (IRA, 401(k), etc.) as they plan savings goals for the new year. But what if you aren't the one getting the benefits, because you have died? How are the benefits getting to your family? Below is a list of some Myths and Misconceptions about Retirement Plan benefits (which can also be thought of a as a list of what NOT to do).

1. My Retirement Plan is distributed the same as my Will. WRONG! Your Retirement Plan is distributed according the Beneficiary Designation you complete for each Retirement Plan.

2. If I don't name a Beneficiary, my Retirement Plan will be distributed to my Estate. MAYBE. Some Retirement Plans say that if there is no beneficiary, it will pass to your Estate. Others give a list of people who will receive the plan in order of priority (spouse, children, etc.). However, if a Retirement Plan is payable to your Estate, there are negative income tax consequences (remember - you haven't paid any income taxes on these assets yet) that are best avoided. Also, for domestic partners or similar, there are never any default provisions for payment to the surviving partner - a Beneficiary Form must be completed.
   

3. If my spouse is named as Beneficiary and we are divorced, she is automatically no longer the Beneficiary. WRONG! Unless you act to change your Beneficiary Designation, your ex-spouse is still your primary beneficiary - not a situation you want to be looking down on from the great beyond. File the Change of Beneficiary when you file for separation.

4. If my minor children are named as Beneficiaries, and I created a trust for them in my Will, then the Retirement Plan will be distributed subject to those trust terms. WRONG! Unless you name the trust created for your children as the Beneficiary of the Retirement Plan, your darling angels will get access to all the Retirement Plan funds at the mature age of 18 (or 21).

5. I know who are my Designated Beneficiaries. MAYBE. Many times a person thought they filed out a Beneficiary Designation, but didn't, or thought they named Contingent Beneficiaries, but didn't, or thought they named a trust for this children, but didn't. You should check or change your Beneficiaries today. A Change of Beneficiary form can usually be downloaded right from the website holding the assets.
   

NJ Real Estate Tax Rebate Filing Extended to October 31

Category: Tax Law and Planning

In NJ, the state with the most out of control property taxes in the Union, there is a plan known as "NJ FAIR" (I make no comments on the name). The purpose of the program is to give a property tax rebate to home-owners and tenants.

All NJ homeowners should have recently received an package in the mail with instructions for calling in to file for the rebate. The rebate can also be filed online. NJ tenants can file a Form TR-1040, FAIR tenant rebate application, either by paper or online. For more information, residents and tenants should go the the New Jersey Division of Taxation.

You can check the status of your rebate filing online as well.

What will all this filing get you? Anywhere between $200 and $350 if you are under 65, and don't have income greater than $200,000; and between $500 and $1200 if you are over 65, and again don't have income greater than $200,000. See Chart Here.