4th stimulus checks in limbo but N.J.’s $500 rebates coming soon. What you need to know. – NJ.com

Missing those stimulus checks already?

Though there doesn’t seem to be much momentum behind a fourth round of federal payments, lower- and middle-class New Jerseyans could have something to look forward to this summer: a $500 tax rebate courtesy of the state government.

The rebates are part of a compromise Gov. Phil Murphy and Democrats who control the Legislature made last year when lawmakers agreed to raise taxes on millionaires. Murphy included more than $300 million for the rebates in his proposed budget. Senate President Stephen Sweeney, D-Gloucester, said last week he expects the plan to pass, though budget negotiations haven’t begun in earnest.

“It’s a done deal in my mind,” he told NJ Advance Media. “In fact, I think it needs to be made permanent, but we’ll have to talk about that going forward. We did this to help the middle class. Well, the middle class needs to be helped all the time, not some of the time.”

The rebate proposal broke a years-long impasse between the governor and Sweeney over Murphy’s calls to raise the tax rate on high-income earners. The agreement, announced in September, came amid the fallout from the pandemic. Officials framed the deal as necessary to help both the state and its residents during the health and economic crises.

“What we’re hoping is that it takes a little of the pressure off,” Sweeney said. “It’s not the end-all, be-all, obviously, it’s $500. But it’s $500 more than they had. And we’re still in strange times, and I’m hoping it helps.”

Republicans and business lobbyists immediately panned the proposal as an ill-conceived political gimmick that will drive wealthy taxpayers out of the state.

Others, meanwhile, criticized the program’s limitation to only taxpayers with a qualifying dependent child, effectively excluding most senior households.

Here’s what we know about the rebates so far:

1. Who is eligible to receive a tax rebate?

Married couples in New Jersey with income below $150,000 and at least one dependent child would qualify for a rebate check. Individuals with less than $75,000 in income and at least one dependent child qualify.

2. Eligibility for the federal stimulus payments was based on adjusted gross income. Will these rebates be, too?

The benefit is based on 2020 gross income, which is your income before taxes and deductions.

3. Are non-residents eligible?

No. Only New Jersey residents would be eligible for the rebate.

4. How many households will qualify?

The administration estimated 764,000 New Jersey households will qualify for a rebate.

5. How much money will you receive?

The maximum rebate is $500.

Unlike the federal stimulus payments, there is no sliding scale based on income here. However, it is a non-refundable tax rebate, which means your state income tax liability has to be at least $500 to receive the full $500 rebate. If your state income tax liability is only $300, you will receive a $300 rebate. If it is $100, you’ll receive a $100 rebate.

“The rebate is the lesser of $500 or an amount equal to the amount of tax after credits on the 2020 gross income tax return,” the Treasury Department said.

The more than 716,000 eligible couples filing jointly would receive an average of $425, while the nearly 48,000 single filers would receive an average of $297, according to the Department of Treasury.

6. What if you have more than one dependent child?

Also unlike the federal stimulus payments, this rebate does not take into account how many dependent children you have.

7. When do the checks go out?

The Treasury Department could begin to issue rebates in July, a spokeswoman said.

8. Will this rebate come as a paper check? Or a direct deposit?

The form of the payment is still being worked out, according to the Department of Treasury.

9. Can the rebate be garnished for back taxes or child support?

It will be subject to the Set-Off of Individual Liability, which withholds tax refunds or benefits from anyone who owes federal taxes, child support, traffic fines, or other debts, the Treasury Department said.

10. How much does the rebate program cost?

Treasury officials put the rebates’ price tag at $319 million. Murphy included funding for the program in his proposed budget but the Legislature has to sign off.

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Samantha Marcus may be reached at smarcus@njadvancemedia.com.