Double-taxed income as a part-time resident in NJ

[edchen]

For context, I lived in NYC for 10 months and then moved to NJ while continuing to work in NYC for 2 months. I've already set up a part-time resident return for both NY and NJ, but I'm a bit confused about how to handle the double-taxed income that comes from the period of time in which I was a NJ resident but working in NYC  and this results in two main questions:

1. On the "Tell us about your New Jersey income" part of the interview for the NJ state return, the total income on W-2 shown is a lot higher than my reported federal wages. I can see that the number comes from the total wages worksheet as a sum of state wages. For example, if my reported federal wage is $120,000, then my NY wage is also $120,000 while my NJ wage is $20,000 because I only lived 2/12 months in NJ. In this hypothetical example, the total wages worksheet would calculate my total income as $140,000. In reading how the process works for a full-time NJ resident that works in NYC, it seems like there's an option to exclude the duplicate state wages that I don't seem to get in the interview as a part-time NJ resident. Is it fine to leave it as-is? Or is this a bug and I need to go into the total wages worksheet and exclude my NJ wages to make the total income more realistic?
2. On the "Tell us about the money you earned in New York" part of the interview for the NJ state return, it asks for the "double-taxed income while a resident of New Jersey" and I don't know which amount to put. I can either put the NY non-resident portion of the income (A) or the NJ reported income (B). They're close, but A + FSA contributions while living in NJ = B.

[DMarkM1]

Yes, you will want to remove the NY box 16 amount in your NJ state interview.  In the NJ step-by-step interview you will arrive at a page asking you to confirm the NJ taxable wages for the employer that has two states lines.  Both box 16 amounts will be listed and you should check the box to remove the NY box 16 amount.

In the NY state step-by-step interview in the "Credits" section  using the "Credit for taxes paid to another state" topic you will enter the NJ box 16 amount when asked about the NJ taxed wages.

[edchen]

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@DMarkM1 wrote:

Yes, you will want to remove the NY box 16 amount in your NJ state interview.  In the NJ step-by-step interview you will arrive at a page asking you to confirm the NJ taxable wages for the employer that has two states lines.  Both box 16 amounts will be listed and you should check the box to remove the NY box 16 amount.

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That's the problem though. During the NJ state interview, I don't get a page asking me to confirm my NJ taxable wages or a checkbox to remove the duplicate state wage. Instead, I get a page that just lists my "total income on W-2" which is the sum of NY and NJ state wages and then it asks me "how much of the $xxx,xxx did you earn while living or working in New Jersey?" So in my hypothetical example, it would say "how much of the $140,000 did you earn while living or working in New Jersey", but my federal and NY wage would actually be $120,000 and my NJ wage would be $20,000.

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@DMarkM1 wrote:

In the NY state step-by-step interview in the "Credits" section  using the "Credit for taxes paid to another state" topic you will enter the NJ box 16 amount when asked about the NJ taxed wages.

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I'm referring to NJ state for credits for taxes paid to another state. Did you mean when I'm filling it out for NJ that I should put the value of NY box 16 which is A?

If it helps to get a better view of my taxes, my token is 1230986.

[DMarkM1]

Got it. The only amount needed in a NJ state line on your W2 in box 16 is the amount that shows the income that NJ taxes and NY does not (not duplicated).  In the federal "Wages & Income" section edit the employer W2 with two state lines and only enter the non-duplicated income amount in the NJ state box 16.  

The allocation amount to NJ in the NJ state interview should be the complete wage amount taxable by NJ during your residence in NJ.  

For the credit for other taxes paid you are correct.  It would be a NJ credit and the income double taxed by NY would be the "A" amount in your scenario (NY taxed income while resident in NJ).   

[edchen]

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@DMarkM1 wrote:

Got it. The only amount needed in a NJ state line on your W2 in box 16 is the amount that shows the income that NJ taxes and NY does not (not duplicated).  In the federal "Wages & Income" section edit the employer W2 with two state lines and only enter the non-duplicated income amount in the NJ state box 16.  

The allocation amount to NJ in the NJ state interview should be the complete wage amount taxable by NJ during your residence in NJ.  

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I'm a bit confused here. Are you suggesting to edit my W2? I imported it from ADP. The amount in box 16 for NJ is the amount that is being double-taxed as I lived in NJ while working in NY. In the hypothetical example, it is $20,000 because I spent 2/12 months in NJ with total wage of $120,000. I did input $20,000 in the NJ state interview, but it's a showing a total income of $140,000 instead of $120,000.

[DMarkM1]

Yes.  Edit the W2 in the Wages & Income section and change the NJ line box 16 to only the amount that is taxable by NJ but not by NY (should be the "FSA" contribution amount).  Then the total wage in the NJ interview will be correct and you can then allocate the part of that total wage on that W2 that belongs to NJ as normal.

You are reporting on your tax return the income that should be taxed by NJ no matter what your employer used (box 16) to withhold taxes.  The tax amount you paid to states is reported in boxes 17 and should not be changed.  

@edchen