Bill Text: NJ A1441 | 2018-2019 | Regular Session | Introduced
Bill Title: Allows gross income tax deductions for contributions, earnings, and qualified distributions associated with special needs trusts.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2018-01-09 - Introduced, Referred to Assembly Human Services Committee [A1441 Detail]
Download: New_Jersey-2018-A1441-Introduced.html
STATE OF NEW JERSEY
218th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2018 SESSION
Sponsored by:
Assemblyman DANIEL R. BENSON
District 14 (Mercer and Middlesex)
Assemblywoman VALERIE VAINIERI HUTTLE
District 37 (Bergen)
SYNOPSIS
Allows gross income tax deductions for contributions, earnings, and qualified distributions associated with special needs trusts.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act allowing gross income tax deductions for special needs trusts 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. Gross income shall not include a taxpayer's contributions to a special needs trust as defined in paragraph (1) of subsection d. of this section.
b. Gross income shall not include qualified distributions as defined in paragraph (2) of subsection d. of this section when such distributions are used for a qualified disability expense as defined in paragraph (3) of subsection d. of this section.
c. Gross income shall not include earnings on a special needs trust until the earnings are distributed from the account, at which time they shall be includible in the gross income of the distributee, except for any earnings included within qualified distributions as defined in paragraph (2) of subsection d. of this section when such distributions are used for qualified disability expenses as defined in paragraph (3) of subsection d. of this section.
d. As used in this section:
(1) "Special needs trust" means a disabled individual's special needs trust established pursuant to chapter 7 of Title 42, United States Code (42 U.S.C. s.1396p(d)(4)(A)); or a non-profit pooled income special needs trust established pursuant to chapter 7 of Title 42, United States Code (42 U.S.C. s.1396p(d)(4)(C)); or a third party supplemental needs trust established pursuant to section SI 01120.200 of the Program Operations Manual of the United States Social Security Administration, the property of which trust is not considered a resource for Supplemental Security Income purposes. A "special needs trust," as defined in this paragraph, shall also meet any additional State requirements pursuant to P.L.2000, c.96 (C.3B:11-36 et seq.) and N.J.A.C.10:71-4.11.
(2) "Qualified distribution" means a distribution from a special needs trust that is used for qualified disability expenses as defined in paragraph (3). The portion of a distribution from a special needs trust that is attributable to earnings shall be determined in accordance with the principles of section 72 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.72).
(3) "Qualified disability expense" means any expense made for the benefit of an individual with a disability who is a designated beneficiary of the special needs trust. A "qualified disability expense" shall be related to the beneficiary's disability and shall supplement, but not supplant, impair, or diminish, any benefits or assistance of any Federal, State, or other governmental entity for which the beneficiary may otherwise be eligible or which the beneficiary may be receiving.
(4) "Gross income" means New Jersey gross income as determined pursuant to P.L.1998, c.57 (C.54A:5-1 et seq.).
2. This act shall take effect immediately and section 1 shall apply to contributions made for taxable years beginning after enactment.
STATEMENT
This bill provides special State income tax treatment for special needs trusts benefitting disabled individuals. The bill would exclude from a taxpayer's New Jersey gross income the amount of the taxpayer's contribution to a disabled individual's special needs trust, a non-profit pooled income special needs trust, or a third party supplemental needs trust. The bill would also exclude from the New Jersey gross income of a distributee the amounts of qualified distributions from special needs trusts and earnings on such qualified distributions.
