If you live in NJ but your wages are earned from a NY source, they are taxable in both states.
Your Resident State taxes all of your income, but gives you a credit for tax paid to to your Non-Resident State. If you W-2 shows taxes paid in both states, you should come out ok.
In your Resident State interview, watch for the screen about 'taxes paid to another state.' You should see the amount of tax paid to your Non-Resident state filled in for you (from your W-2 entry).
Prepare your Non-Resident State return first, then your Resident State.
Click this link for more info on How to File a Non-Resident State Return.
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