Question

DE tax not credited correctly on NJ tax return

Forum|Forum|3 years ago
April 3, 2023
1 reply
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I am a NJ resident preparing non-resident, DE state return with w2 income in both states.

I noticed that the tax calculated in DE return is not completely credited in NJ return (almost 30% less)

The amount of credit in NJ return should be similar (close) to DE state tax.

Thanks.

It depends. NJ first calculates a ratio using the income taxed by DE divided by the NJ taxable income. That ratio is multiplied by the NJ tax on all income to arrive at the maximum credit for taxes paid to the other state. The actual credit will be the lesser of the DE tax on the income or that calculated percentage of NJ tax.

The other factor that may come into play is the credit is nonrefundable. The credit is limited by the NJ tax.

Return to the NJ return and update the "Credits" section. Verify the amount of income taxed by DE and the DE tax on that income from the DE nonresident state interview. Keep in mind the DE tax is not the withholding amount but the actual tax as calculated in the DE return.

You can view a summary of your state returns in online versions using the steps below. You can use the print center to download/print the actual forms if needed to see the complete calculation on the NJ form COJ.

1. Select "Tax Tools" in the left hand menu
2. Select "Tools" (or "Print Center" if printing/downloading)
3. Select "View Tax Summary"
4. Select "Preview My 1040" in the left hand menu

5. Select "DE Tax Summary" and/or "NJ Tax Summary"

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