Why am I showing business income from New Jersey when my business is solely carried out in other states?

[sfoksn]

We are married filing jointly for 2019. We are full time residents of NY. I have a self-employment business that exclusively earns 1099 income from CT. My wife has a separate self-employment business that exclusively earns 1099 income from NY.

While filing New Jersey non resident state tax, it is showing taxable income on both of our self-employment business although none of our 1099 income is from NJ.

Is this normal? Shouldn't it have no taxable business income for New Jersey if our self employment 1099 income was exclusively earned from NY and CT?

[SusanY1]

As you go through the interview for New Jersey, you will be given the opportunity to tell the program which income is and isn't included in your New Jersey nonresident report. You will need to manually adjust the amount of income. 

This is done from the screen that reads "Business Activities Outside New Jersey".  Even though it sounds as if 100% of your business was outside of New Jersey in order to enter this part of the interview answer Yes to "Did you carry on business activities inside and outside New Jersey during your period of nonresidence?" so that you can indicate that the income was earned outside of New Jersey. 

[sfoksn]

@SusanY1 

Thank you for your input.  After answering Yes to the question that you mentioned and putting in the business location outside NJ, I allocated 0% of business income to be from NJ.

However, on the Business Summary under State Tax return, it still shows positive taxable amount.  Is this correct? How can I ensure that I am not overpaying taxes? 

Thank you!

[AmyC]

Please take a look at your tax summary. 

1. Select Tax Tools on the left hand side of your screen,
2. Select Tools,
3. Select View Tax Summary,
4. Select  NJ Tax Summary on the left hand side of your screen.

Is the NJ gross income correct? If so, click Back on the left tab and you are good. If not,  contact a specialist that can work through that section of the return with you. 

In the program, it should be showing business income and then reporting it as $0 taxable.

[sfoksn]

@AmyC @SusanY1 

Thanks for your input.

What should the NJ gross income be?

For example:

If my wife and I made 100k total -

Wife

30k from NJ W-2

20k from NY 1099 self employment business

Me

30k from CT W-2

20k from CT 1099 self employment business

Should NJ gross income be ~30k?  Because currently, it looks close to our total federal AGI. 

[ThomasM125]

Your New Jersey income is your federal income plus or minus a few adjustments. To arrive at your income tax in New Jersey, you divide the income you earned in New Jersey by your total income to arrive at a percent that is then used to determine the portion of your tax that applies to New Jersey.

So, your New Jersey income will be close to your federal income, but you are not taxing the full amount of your income to arrive at your New Jersey tax.