S4837

An Act providing a gross income tax deduction for expenses incurred by certain taxpayers for the care of certain close relatives and supplementing Title 54A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. As used in this section:

“Eligible expenses” means reasonable and necessary expenses paid by a taxpayer for the care and support of a qualifying close relative, including expenses for food, housing, utilities, transportation, medical care, personal care, and other expenses directly related to the care and support of the qualifying close relative. “Eligible expenses” shall not include expenses reimbursed to the taxpayer by any other person or entity or otherwise deducted from the taxpayer’s gross income.

“Eligible taxpayer” means a taxpayer whose New Jersey gross income for the taxable year is less than $200,000 and does not exceed 400 percent of the federal poverty level applicable to the size of the taxpayer’s household, including the qualifying close relative.

“Federal poverty level” means the poverty guidelines applicable to New Jersey based upon family size that are updated annually in the Federal Register by the United States Department of Health and Human Services under Section 673(2) of Subtitle B. of the federal “Community Services Block Grant Act” Pub.L.97-35, 42 U.S.C. s.9902(2).

“Qualifying close relative” means a taxpayer’s grandparent, step-grandparent, grandparent-in-law, parent, step-parent, parent-in-law, uncle, step-uncle, uncle-in-law, aunt, step-aunt, or aunt-in-law who is 70 years of age or older.

b. An eligible taxpayer who resides with a qualifying close relative for the entirety of the taxable year shall be allowed a deduction from the taxpayer’s gross income equal to the amount of eligible expenses paid by the taxpayer for the care of the qualifying close relative, but not to exceed $3,000 per qualifying close relative, and not to exceed a total of $6,000 per taxpayer per taxable year.

c. A taxpayer claiming a deduction pursuant to this section shall maintain receipts or other documentation substantiating the eligible expenses paid by the taxpayer, in a form and manner prescribed by the Director of the Division of Taxation in the Department of the Treasury.

2. This act shall take effect immediately and shall apply to taxable years beginning on or after January 1 of the year next following the date of enactment.

STATEMENT

This bill provides a gross income tax deduction for certain taxpayers who incur expenses for the care and support of elderly relatives.

Under the bill, an eligible taxpayer who resides with a qualifying close relative for the entirety of the taxable year is allowed a deduction from the taxpayer’s gross income equal to the eligible expenses paid by the taxpayer for the care of the qualifying relative, not to exceed $3,000 per qualifying relative. The total deduction may not exceed $6,000 per taxpayer per taxable year.

To qualify for the deduction, the taxpayer’s New Jersey gross income for the taxable year must be less than $200,000 and may not exceed 400 percent of the federal poverty level applicable to the size of the taxpayer’s household, including the qualifying relative. The bill defines a “qualifying close relative” as a grandparent, step-grandparent, grandparent-in-law, parent, step-parent, parent-in-law, uncle, step-uncle, uncle-in-law, aunt, step-aunt, or aunt-in-law who is 70 years of age or older.

Under the bill, eligible expenses include reasonable and necessary expenses for food, housing, utilities, transportation, medical care, personal care, and other expenses directly related to the care and support of the qualifying relative. Eligible expenses do not include expenses reimbursed to the taxpayer by another person or entity or otherwise deducted from the taxpayer’s gross income.

The bill also requires taxpayers claiming the deduction to maintain receipts or other documentation substantiating the eligible expenses paid, in a form and manner prescribed by the Director of the Division of Taxation in the Department of the Treasury.