Yes, you will select NY IRC 414h subject to NY tax. You will also need to be sure when you allocate your NJ wage income out of NY to also allocate out the 414h amount.
NY wants to know/use all income in order to calculate the NY tax on NY source income. NY does this by dividing the NY source income by the total income and using that percentage to mulitiply by the tax on all income to arrive at the NY tax on NY source income. Since your box 1 wages excludes the 414h contributions you need to have that added back in for NY calculations.
As I mentioned earlier, you will then be sure to allocate out of NY income your wages and the 414h contributions from box 14.
This should now allow the e-file and correctly show the NY tax on NY source income.
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