How do I properly request tax refund for 2020 from NJ claiming tax credit for taxes paid to NY? Should I re-file tax return for 2020, or some specific form is enough?

Forum|Forum|4 years ago
December 9, 2021
4 replies
25 views

I got corrected W-2 from employer instructing to request full tax refund from taxes they paid from my checks to NY (where I work) and pay everything to NJ (where I live). Which I did. And NY audited this and decided that since company is registered in NY they have (due to COVID situation) decided they'll keep all the taxes. Do I need to re-file all the package (NY, NJ, Fed) for 2020 or is there a form specifically to claim refund for tax credit portion from state?

TurboTax Online

Hal_Al

Level 15

There is no special form. The way you "re-file" a tax return is to file an amended return. Use form 1040X for federal and Form IT 201-X for NY and Form NJ-1040X for NJ.

Since, NY has apparently rejected your amended return, you do not need to refile NY. But if NJ did accept your amended return, you'll have to file a 2nd NJ amendment to correct that. The federal return is usually not affected by state amendment(s).

It sounds like you were given bad advise ["instructing to request full tax refund from taxes they paid from my checks to NY (where I work) and pay everything to NJ (where I live)"].

The NY Dept. of Taxation is correct, that income is taxable by NY. NJ will also tax it, but give you a credit, or partial credit, for the tax you paid to NY.

fanfare

Level 15

Did you e-File your NJ Return? Different rules in that case, see NJ-1040X instructions.

NJ wants the entire revised NJ tax return included with NJ-1040X.

See the form NJ-COJ to claim your credit.

dzmitryAuthor

Level 2

No I didn't e-file. Because for NY e-file was denied by TurboTax citing some NY regulation they don't accept e-file for such big refund (effectively all year state taxes). And because of that TurboTax also rejected to e-file for Fed and NJ tax return as well (since I mailed and not e-filed for at least one state).

Thank you I'll check the instructions that you mentioned, but for me they are hard to interpret, it's like learning Chinese language.

I was also surprised I couldn't get help from TurboTax advisors on my 2020 return "until you choose the product for *this* round", not sure how my choice for 2021 round (if I even decide to use it again) affects questions related to tax return 2020 preparation. I hope to get enough information from this forum to move on with that refund, thanks to your answers.

Just to sum up the situation:

- employer paid all taxes to NY

- employer provided me W-2 with taxable income for Fed/NY/NJ for my full that year income from that employer, and when I asked what should I do to avoid double-taxes employer informed me (I'm posting quote here):

"We've connected with the Tax team, who advised you will need to file a resident NJ tax return indicating (here comes some number S1 - my full salary) taxable wages, $3.18 tax withheld. Then a non-resident NY tax return needs to be filed indicating $0 taxable wages and (here comes some number T1 - full NY tax paid during year) tax withheld, requesting a refund of the (reference T1). The NY income tax withheld must be refunded by the state and cannot be refunded by the employer once the W-2 is completed"

- taxes filed accordingly by mail to Fed and states, since TurboTax didn't allow to e-file due to that "strange" NY refund numbers

- NY audit requested additional information and next iteration with my employer ended with:

"After further review with the leaders of our Payroll Tax Team, they have advised you can disregard the W-2C. The original W-2 as reported is correct. Under the circumstances and taking into account the state tax regulations, you would be 100% liable for NY income tax. (that number I referenced as S1) should be reported as taxable wages to NY with (reference T1) taxes withheld. As a NJ resident, (some number close to S1 but not identical) should be reported as taxable wages with $3.18 withheld and a credit of (ref S1) credit for taxes paid to NY."

- so NY kept most of the money (they actually refunded me some because my dependents weren't counted in by employer so they overpaid during the year to NY) and informed that case is resolved