It can be a bit of a computation in your case. If you moved from NJ to NYC with a job in NYC, you were a NY Nonresident and a NY Part-year resident. While all of your income is taxable in New York State, only the income that is "NYC resident income" is taxable to New York City.
Given what you've posted above, use the following technique to determine the New York tax that qualifies for the "double-taxed income" credit in New Jersey:
- First, reconcile the city taxes, which is the city tax withheld minus city tax computed minus city tax credit (the $495 you see). If that results in a negative, this is how much tax you owe for the NYC portion. Subtract that number from the city taxes again (if a negative, then this will add to the tax withheld). This will determine how much of the overall state tax is actually city tax. Subtract this city tax figure from the "Allocated NYS tax". This is the base "NY State" tax figure.
- Now, prorate the New York State tax to determine the "nonresident" portion. Multiply the amount of New York nonresident income by the total overall income. Multiply that percentage by your result on point one. That result is what is the tax on the double-taxed income, which is the income that is being taxed by both New Jersey and New York.
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