Deductions & credits

TurboTax is correct. The property tax credit is better because your NY other state tax credit will offset all your NY income without needing to deduct property taxes. Therefore it is better to use the credit, since the property tax deduction is unnecessary to reduce your NJ tax liability (net of the NY credit). This is NJ’s computation which TurboTax uses.

Schedule NJ-COJ computes the allowable credit with or without the $10,000 property tax deduction. In this example, the max credit with the $10,000 deduction is $3,545 and $4,182 without it.

Worksheet I shows no tax is owed whether the property tax is deducted or not. Therefore is it better not to deduct any property tax, since the deduction is not needed—and claim the credit instead.