No. NJ taxes wages differently than NY so for the NY return enter only the income that would be taxed by NY.
The credit you receive is the amount of NJ tax or the tax NY would charge on that income under their rules. The fact that NJ taxes a higher amount of wages than NY, does not affect the amount that should be taxed by NY but it will affect the amount of credit you are allowed to receive. The credit is the lesser of what NY would charge in tax or the amount NJ does charge in tax.
It can be a usual-unusual situation because of the way each state handles the contributions to a 403(b) plan. However, it is my belief that NY would not willingly give a higher credit than what they would charge for these same wages which would be allowed a reduction for the contribution if it were handled in their state versus NJ. I don't see this specifically in writing so I'll let you be the judge on what to enter. This could be a nonissue since it's likely the NY state tax would be higher in general.
@tanalin
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