Question

Live in NJ, Work in NY, Taxes only taken out of NY

Forum|Forum|5 years ago
February 8, 2021
1 reply
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I moved from NYC to NJ in Aug. 2020. Right after, I started a job in NYC, for which only NYS deducts taxes. At the same time, I worked a second job (freelance but I get a W2) that switched the tax deductions from NY to NJ once I gave them my new address. (I had another job in NY at the start of the year + NY unemployment that ended right before I moved out of NY.)

It's my understanding that NJ gives credits if you live in NJ but work in NY and pay NY taxes. Is this always the case, or only if my job took out taxes from both NY and NJ? Only about 1/3 of my entire wages for the year were earned while a resident of NJ, but the vast majority of that was taxed by NY, so I suspect I should owe something to NJ, but am trying to understand how the credit for taxes paid to NY works.

LenaH

Per the New Jersey Division of Taxation, residents are required to pay state income tax on all of their income and then get a credit on their taxes paid to another state, which will reduce any New Jersey income tax liability. This credit does not depend on whether or not taxes were withheld from two different states.

However, since you were a part-year resident, you will only report the income you earned while you were a New Jersey resident. Then, you will get a credit for the income tax paid to New York while living in New Jersey.

You will also have to file a New York part-year resident return. On your New York return, you will include all the income you earned living and working in New York.

The first thing you want to do is make sure you've filled out the Personal Info section correctly:

With your return open, select My Info in the left-hand menu.
Then, on the Personal info summary screen, scroll down to Other State Income, and select Edit.
At the Did you make money in any other states? question, answer Yes and make sure your nonresident state(s) are selected from the drop-down.
Select Continue to return to your Personal info summary.

After you finish your federal return, you'll automatically move to the State tab, where you'll see your nonresident/part-year resident state(s) listed in addition to your resident state.

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