Expert: Arthur Naman - 2/11/2011

Question
In New Jersey, does Simple IRA contributions deducted from my gross wages earned, reduce my NJ taxable gross income?

So on my W-2 form, should I see the same wages in Box 1 (Federal) and in Box 16 (State Wages)?

Answer
Normally gross wages on a from W-2 do not reflect any reduction for IRA contributions. If IRA contributions are made by your employer for you, then those contributions should be shown separately in a box on the W-2.

You can then take any deduction for IRA contribution on you tax return, the federal form 1040.

Similarly, a deduction should be allowed on the state tax return.