My client who resides in New Jersey but works in New York received adjustment audit for NJ return. He works with the New York City and made IRC 414(h) and IRC125 contributions. They were properly added in NY and taxed. New Jersey says it should also be added for NJ tax purpose for that year. BUT NJ taxes Out of State pension at retirement. Could someone help me?
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Leqal question
I think you need help from a lawyer. In NC our Supreme Court has in separate decisions held that the State may not tax pensions of retired state employees who were vested by a certain date because years ago it promised not to tax those pensions and that under the equal protection clause of the US Constitution NC may not treat taxpayers with Federal and or Other State and local government pensions differently from the way it treats taxpayers with NC state and local government pensions. Your problem in relying on this line of thinking is that you need either a New Jersey or Federal court opinion that says the same thing. The quick and easy way to find out whether such exists is to hire a lawyer. You could also search law libraries on the internet. Cornell and Rutgers have two of the better ones that are free to anyone. Finally, if no such decision exists perhaps your client could explore becoming the lead plaintiff in a class action suit seeking such an opinion. But I doubt you can convince the State of NJ they are wrong in this case unless you have or get a decision from a court of competent jurisdiction saying they are wrong.Last edited by erchess; 03-17-2012, 06:15 PM. -
New Jersey doesn't fully tax contributory pensions. They'll allow exclusions for amount previously taxed. So it sounds like they're right.Comment
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