@cc11jimmy wrote:
How do i know if that 'credit for taxes paid to another state' is correct? The number seems to be different than NY Tax amount (understand it is not the withholding amount".
The credit is not supposed to be equal to your total NY tax, and probably will not be, because NY tax rates are higher than NJ. They call it "credit for income taxes paid to other jurisdictions," but when New York is the other state it's not really a credit for the New York tax. The credit eliminates the New Jersey tax on the income that was taxed by New York, but you still pay the full New York tax. That's because the New York tax rates are higher than the New Jersey rates.
The following is from New Jersey Publication GIT-3W (page 2).
"This credit minimizes double taxation of income that is already taxed by other jurisdictions. Though the credit reduces your New Jersey Income Tax, you are not necessarily entitled to a dollar-for-dollar credit for the total amount of taxes paid to the other jurisdiction. The credit represents the amount of New Jersey Income Tax that you would have paid had the income been earned in New Jersey, or the amount of tax actually paid to the other jurisdiction, whichever is less."
For more details about the credit, you can download Bulletin GIT-3W from the following link.
GIT-3W, Credit for Income Taxes Paid to Other Jurisdictions (Wage Income)
It's not necessary to delete and redo the New Jersey return. (There's no harm in doing that. It's just extra work.) Just go back to the New Jersey return and click the Update button for Taxes and Credits. Go through the Property Tax Deduction or Credit again. When you get to "Credit for Taxes Paid to Another State" click Work on Credit.
