Question

State Tax Overpayment Penalty for Nonresident

Forum|Forum|3 years ago
April 15, 2023
1 reply
0 views

I work in NY but live in NJ. My company pays all state tax to NJ. That leaves me with a large tax bill for NY and am forced to pay an underpayment penalty. Is there a way to avoid that? I have no control over how my employer pays state tax.

T

TomD8

Employee

You might inform your payroll department that New York requires employers to withhold NY taxes from New York State nonresidents being paid wages for services performed within the state.

https://www.tax.ny.gov/bus/wt/whtax_require.htm

I think you should appeal any underpayment penalty imposed by New York.

You will owe NY income tax, but you'll be able to claim a credit on your NJ return for the taxes paid to NY. In TurboTax, prepare the NY return before you do the NJ return, so that the program can correctly calculate and apply the credit.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.