My son lived all year in NJ but worked all year in NY. The NJ return acknowledges the correct tax amount paid to NY. I expected that amount to be the tax credit for NJ, but the NJ return multiplies the amount by a "maximum allowable credit percentage" (85%) and applies that result as the tax credit. Apparently that's because NJ will not credit a NY tax amount which is greater than what NJ would have taxed on that amount of income.
The result of this, it seems to me, is that he is ending up paying all of the NJ tax owed on that income plus the 15% of the tax paid that was to NY. I hope that I am misunderstanding this.
