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Department of Taxation -- Individual Tax Filing
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1. Do I have to file
a return? |
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All residents of
Trenton age, 16 or older, are required to file a tax return
regardless of where they work. |
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2. Do I have to file
a return if I work in Trenton but live elsewhere? |
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You are subject to
tax on all income earned while working in the City, regardless
of where you live or where your employer's main office is
located. But, the City holds the employer liable for withholding
the tax. Therefore, you do not have to file a Trenton tax return
if you work in Trenton but live elsewhere. Exceptions to this :
A. If you
are a Federal employee working in the City of Trenton and your
city tax is not withheld you must file a Trenton tax return.
B. If you
are self-employed in the City of Trenton and live elsewhere, you
must file a Trenton tax return. |
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3. What income is
taxed by the City? |
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Earned income is
subject to the Trenton local income tax but unearned income is
not. Common illustrations of earned income include salaries,
wages, commissions, bonuses, and other compensation paid by
employer(s) before any deductions. Unlike for your Federal
return, you may not deduct contributions to a retirement plan
(IRA, 401k, 403b, or 457b) on your Trenton return. Gross
earnings are taxed in the year earned. Most pension and
retirement income is not taxable when you are retired and
receiving distributions. |
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4. What income is
non-taxable? |
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The City does not
tax unearned income. Examples of unearned income are dividends,
interest, capital gains (unless taxed as ordinary income),
alimony received, state unemployment benefits, worker's
compensation, social security, welfare assistance, most pension
or retirement income, and clergy housing allowance.
Military pay is also not taxable.
Additionally,
income earned by individuals under 16 is not taxable by the City
until the day they reach age 16. If Trenton taxes have been
withheld while you were under age 16, you may file for a refund
of this amount of tax on income earned before your birthday.
(Attach proof of age, such as a copy of your driver's license or
birth certificate). |
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5. What expenses are
deductible from earned income on the return? |
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The only expenses that can be deducted from
earned income as an individual are those reported on Line 26 of
Federal Schedule A – Itemized Deductions. These pertain to
unreimbursed business expenses incurred as an employee. (You
may not use the amount on Federal Form 2106 since the Federal
limitations do apply). |
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6. What if I also
earn incidental income on the side? |
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You may be employed
and also earn incidental income on the side. If so, your
incidental net income is subject to tax. It might be in the form
of fees for consulting or professional services, honorariums
from speaking engagements, royalties from publications, small
construction jobs, rental property, or other earned income. |
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7. What if I earn
incidental income from more than one unincorporated business? |
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You may combine the
results of each business and report the total on page one of the
Form IR, Please also attach copies of all applicable federal
forms. |
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8. How are net
operating losses from side businesses treated? |
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Net operating losses
cannot be used to offset employee wages. For unincorporated
businesses, if you operated more than one business, a net
operating loss within the city can be used to offset profits
from any other type of business you operate within the
city. The remainder of the loss that could not be offset to
other business profits can be carried forward to be used as a
future offset for up to three years. Losses must be reported on
Form IR, but are not deducted in the computation of your
individual taxable income. |
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