No, you should not tax all wages to New Jersey (NJ). Only wages earned when you are at your employer's office in NJ should be reported and taxed to NJ.
Prepare the NJ return first, then your resident state. All wages for the entire year are taxed to New York (NY) since this is your residency state. The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income. As the resident state all worldwide income must be included.
The credit for tax paid to another state on the same income will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
NJ Convenience of Employer rules:
Who does the Convenience of the Employer Rule apply to?
The new law only applies to nonresident employees working for a New Jersey employer who are residents of states that also impose a similar test, such as Delaware, Nebraska, and New York. Note that this list may change accordingly based on the laws of different states. Under the new law, wages earned by residents of , Delaware, Nebraska, and New York working for a New Jersey employer and working from an out-of-state location (e.g. telecommuting from their resident state) are allocated to New Jersey, unless they are working remotely due to the necessity of the employer, rather than their own convenience.
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