Yes, NY now taxes lump sum distributions that are NY sourced. So your distribution is taxable to NY and then NJ will tax you and give you a credit for the double taxation.
Your resident state taxes all income but gives a credit for income taxed by another state. Please carefully follow these directions.
You will need to prepare the states in a special order. You may need to delete both states and begin again.
- First, prepare your non-resident return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
- THEN prepare your resident state return and it will generate a credit for your income already being taxed in the non-resident state.
- The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state.
It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.
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