Rutgers Law

New Jersey Statutes, Title: 54A, NEW JERSEY GROSS INCOME TAX ACT

    Chapter 4: Resident credit for tax of another state

      Section: 54A:4-1: Resident credit for tax of another state.

          54A:4-1. Resident credit for tax of another state. (a) A resident taxpayer shall be allowed a credit against the tax otherwise due under this act for the amount of any income tax or wage tax imposed for the taxable year by another state of the United States or political subdivision of such state, or by the District of Columbia, with respect to income which is also subject to tax under this act, except as provided by subsections (c) and (d) of this section.

(b) The credit provided under this section shall not exceed the proportion of the tax otherwise due under this act that the amount of the taxpayer's income subject to tax by the other jurisdiction bears to his entire New Jersey income.

(c) No credit shall be allowed against the tax otherwise due under this act for the amount of any income tax or wage tax imposed for the taxable year on S corporation income allocated to this State.

(d) No credit shall be allowed for the amount of any taxes paid or accrued for the taxable year on or measured by profits or income imposed on or paid on behalf of a person other than the taxpayer, whether or not the taxpayer may be held liable for the tax.

(e) Readjustment of the tax of another state or political subdivision thereof--if the taxpayer is allowed credit under this section for more or less of the tax of another state or political subdivision thereof than he is finally required to pay, the taxpayer shall send notice of the difference to the director who shall redetermine the tax for any years affected regardless of any otherwise applicable statute of limitations. A taxpayer may readjust the credit under this subsection when another state changes or corrects income reportable there either within the limitation period prescribed in N.J.S.54A:9-8 or within one year after the date the taxpayer received notification that the other state's income tax was due, whichever of such periods expires later. The division shall not allow a credit or refund unless the taxpayer files a claim within such period.

(f) A resident taxpayer shall be allowed a credit against the tax otherwise due under this act for the amount of any tax that the director determines is substantially similar to the tax imposed pursuant to section 3 of P.L.2019, c.320 (C.54A:12-3), for the taxable year, by another state of the United States or political subdivision of such state, or by the District of Columbia, with respect to the direct and indirect distributive proceeds from a pass-through entity, which distributive proceeds are also subject to tax under this act. A credit allowed pursuant to this subsection shall not exceed what would have been allowed if the income was taxed at the individual level and not taxed at the entity level.

For purposes of this subsection, "distributive proceeds" and "pass-through entity" mean the same as those terms are used in section 2 of P.L.2019, c.320 (C.54A:12-2).

amended 1993, c.173, s.7l; 2019, c.320, s.8; 2023, c.125, s.1.

This section added to the Rutgers Database: 2023-11-27 20:56:37.

Older versions of 54a:4-1 (if available):

Court decisions that cite this statute: CLICK HERE.