Here’s how NJ veterans can get a bigger tax refund

New Jersey veterans have reason to be gung-ho about filing their state income tax returns this year: a $3,000 income tax exemption.

The benefit is open to any of New Jersey's estimated 400,000 veterans, regardless of age. The only caveat is that the veteran must have received an honorable discharge or been discharged under honorable conditions.

"This is a sizable deduction designed to aid the men and women who have served honorably in our armed forces," Elizabeth Maher Muoio, the acting state treasurer, said in a statement. "We can never fully repay them for their service, but it is our hope that this benefit will make acclimation to civilian life easier, make raising a family more affordable, and enable aging veterans to live more comfortably in retirement."

Deadline approaches

With the April 15 tax deadline fast approaching, it's not clear how many veterans know about the new exemption. The New Jersey Division of Taxation has been working with veterans' groups to spread the word. The division estimates that as of February, roughly one-third of the state's 400,000 veterans had applied for the exemption.

Veterans have to submit proof of their discharge, whether they submit a paper tax return or file one online. The most common form of proof is the DD-214 form issued to all service members when they are discharged.

"I've been inundated with calls about this," said John Harris, the head of Passaic County's Office of Veterans' Affairs. "Most of the calls have been from veterans who don't have a copy of their DD-214 form and want to know how to get one."

The new exemption for veterans is part of a package of tax breaks that Gov. Chris Christie signed in 2016 as part of the political trade-off for raising New Jersey's gas tax, which he opposed. The exemption cannot be retroactively applied, but once a veteran applies for the deduction they don't need to apply again.

What it means

When applied to the 2017 tax return, the exemption lowers taxable income by $3,000, which in turn lowers the veteran's tax burden. The amount of savings varies with income.

As an example, a veteran who earned $75,000 in taxable income in 2017 and filed as single would now have a taxable income of $72,000 with the exemption. That would reduce the state taxes paid by the veteran from $2,653 to $2,487, which is a net savings of $166.

If that same veteran was married and filed a joint return, the tax burden would be reduced from $1,471 to $1,366, which is a net savings of $105.

Down the income ladder, a single veteran with $50,000 in taxable income who takes the exemption would now be taxed on $47,000 of income. Taxes for the single filer would be reduced from $1,271 to $1,106, a net savings of $165. A married veteran filing jointly would lower state taxes from $1,271 to $1,106, a savings of $53.

"Every little bit helps," said John Swank, the commander of Anthony Wayne Post 174 of the American Legion in Wayne. Like many other veteran halls, Post 174 has the form and has been helping members sign up for the exemption.

In addition to the new tax exemption, New Jersey gives special breaks to disabled veterans. The state grants a veteran who is 100 percent disabled as a result of military service a 100 percent property tax exemption. The veteran need not have become 100 percent disabled through combat; the injury only has to be service-related.

How to get the return

To apply for the exemption, veterans need to prove their honorable discharge by submitting a copy of their DD-214. Veterans who need to obtain a copy of their DD-214 can do so by contacting the United States National Archives and Records Administration online at www.archives.gov/veterans/military-service-records.

The DD-214 needs to be submitted with an application for the exemption. That form, which can be mailed, emailed or faxed to the state Division of Taxation, is available online at www.state.nj.us/treasury/taxation/military/vetsexemption.