S143

An Act concerning income requirements for tuition aid grants and income tax relief for taxpayers who claim certain dependents and supplementing Title 18A and Title 54A of the New Jersey Statutes.

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

1. The Higher Education Student Assistance Authority shall exclude retirement income from consideration when calculating a family’s or student’s ability to contribute to the cost of higher education for the purposes of qualifying for a tuition aid grant pursuant to N.J.S.18A:71B-20.

For the purposes of this section, “retirement income” means any Social Security or other retirement income, including withdrawals or payments from retirement accounts, plans, or pensions.

2. a. A resident taxpayer shall be allowed a credit against the tax otherwise due for the taxable year under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., in an amount equal to $1,000 for each dependent under the age of 19 years, or 22 years for a dependent who is attending an accredited post-secondary institution of higher education on a full time basis and for whom the taxpayer paid one-half or more of the costs of tuition and maintenance of the dependent’s attendance at that institution, who is not the child of the taxpayer.

b. Notwithstanding any other provision of this section, a taxpayer who has gross income for the taxable year of more than $100,000 shall not be allowed a credit pursuant to this section.

c. If the credit allowed pursuant to this section, together with any other payments, credits, deductions, and adjustments allowed by law, reduces a taxpayer’s tax liability otherwise due for the taxable year pursuant to N.J.S.54A:1-1 et seq. to zero, the amount of the credit remaining shall be paid to the taxpayer as a refund of an overpayment of tax in accordance with N.J.S.54A:9-7; provided however, that subsection (f) of that section, concerning the allowance of interest, shall not apply.

d. The credit for a claimant qualified pursuant to subsections a. and b. of this section who, pursuant to N.J.S.54A:2-4, is not subject to tax, shall be applied for annually on an application as shall be made available by the director, to be filed with the director on or before the date for filing annual gross income tax returns.

e. As used in this section:

“Child” means a son, daughter, stepson, or stepdaughter related by blood or law.

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

STATEMENT

Due to unforeseen circumstances, children are removed from their parents’ care and placed with relatives. More recently, the opioid epidemic has forced more children into foster care or their relatives, specifically grandparents, have interceded and elected to care for the displaced children. Those grandparents who elect to care for their grandchildren may have restricted amounts of income and savings and must deal with the everyday costs of raising a young child.

This bill provides that the Higher Education Student Assistance Authority must exclude retirement income from consideration when calculating a family’s or student’s ability to contribute to the cost of higher education for the purposes of qualifying for a TAG award. Eligibility for Tuition Aid Grant (TAG) awards are determined using an assessment of a student’s or family’s ability to contribute to the cost of higher education. Under current practice, this determination includes a review of all income, including retirement income.

For the purposes of this bill, “retirement income” means any Social Security or other retirement income, including withdrawals or payments from retirement accounts, plans, or pensions.

The bill also provides a refundable $1,000 gross income tax credit for taxpayers who claim a dependent under the age of 19 years, or 22 years for a dependent who is attending an accredited post-secondary institution of higher education on a full time basis and for whom the taxpayer paid one-half or more of the costs of tuition and maintenance of the dependent’s attendance at that institution, who is not their son, daughter, stepson, or stepdaughter. A taxpayer who has gross income for the taxable year of more than $100,000 is not eligible for the tax credit provided in the bill.

The sponsor’s intent is to assist those taxpayers, with limited incomes and savings, who assume the responsibility of caring for a child, who has been displaced due to unforeseen circumstances, and claim the child as a dependent. Dependent for gross income tax purposes means any individual who qualifies as a dependent pursuant to the federal individual income tax.