No, you will not be double taxed. New York (NY) also has a credit for taxes paid to another state on the same income. NY does not have a reciprocal agreement with any state. Since you are a NY resident, any money taxed to New Jersey (NJ), NY will provide a credit for tax paid to another state or in your case NJ.
State Returns - Your resident state requires you to include all worldwide income. Assume both states require income tax returns to be filed:
- Report the income on each state return that is from the nonresident state
- Report it on your resident state and receive credit for taxes paid to another state.
Credit for taxes paid to another state is allowed by a resident state when the same income is being taxed to another state. Your resident state does not want you to pay tax twice on the same income. The credit that is allowed 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
In most cases complete your nonresident state first and TurboTax will automatically carry the credit to your resident return.
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