Double taxed income NY & NJ. How to calculate?

[rebazambrano]

SOS!
I finished my NY return as a non-resident and now I am struggling trying to understand how to fill out this part of my NJ return. I lived in NJ for 7 months and worked in NY for 5 months. I got NY unemployment and my husband got NJ unemployment (filing jointly) and at this point I am not sure how to get these numbers for the NJ double taxed income credit. Where do I find this info in my NY return or how can I calculate it?

THANKS!

[DanielV01 · Accepted solution]

You have a bit of a tricky situation to calculate, and I might need a few more details.  The idea behind the "double-taxed income" window is to determine the income that was taxed BOTH by New York and New Jersey at the same time.  In your case, it will be the income you earned in New York while living in New Jersey.  By the way you worded your response, that would be any income you worked in the last 5 months of the year.  Unemployment does not count, because while New York does tax unemployment compensation, New Jersey does not.  So if you received New York-sourced unemployment after moving to New Jersey, you will continue to pay NY tax on that income, but that income will not qualify for a New Jersey tax credit.

Make sure you have prepared your New York return first to get the amount of income and tax you are claiming and is being taxed by New York.  Once you have the gross amounts being taxed by New York, then you need to figure out how much you are taxed.  To figure this out, add up the New York tax withheld from your Forms W-2 and 1099-G (unemployment).  Next, subtract any refund you are receiving from New York.  If instead you owe New York, then add the amount you owe.  This number represents New York's tax on New York income. 

Now, to find out how much of this income is double-taxed, you need to figure out how much has been reported also to New Jersey.  That number could be on your W-2 (which would make your life a lot easier if it is).  If it is not, then you will probably need to do some math.  Take the W-2 that has the double-taxed income, and multiply that amount by the percentage of income earned while living in New Jersey.  (If I read your information correctly, you worked this particular job for 7 months total, but 5 while living in New Jersey.  If that is correct, then the double-taxed income would be 5/7 of the total income, or roughly 71.4%  That number represents the double-taxed income.

Next, you need to figure out your percentage of double-taxed income on your New York return.  Divide the New Jersey double-taxed income you figured out in the above paragraph by your total New York income (including unemployment).  That produces a percentage.  Now, multiply that percentage by (1) the total New York income (and that should give you the same number as the paragraph above.  This number you can put in Box 1 of your screenshot:  Double-taxed income while a resident of New Jersey.  Now, use that same percentage and multiply by the amount of net New York Tax, which is the amount you figured out in the second paragraph.  This prorate is New York's tax on the double-taxed income.

New Jersey's credit will be the lower of what New Jersey taxes the double-taxed income or what New York taxes the double-taxed income.  Also, make sure that when you are in the New Jersey return, you have reviewed the screen About this W2 income.  On that screen, you must be sure to check the NY box to make sure that the NY income is not being double-added on your New Jersey return, thus making your NJ income (and tax) even higher than what it should be.

[rebazambrano]

Amazing, I am working on this right now.

So, just to better explain the living situation: My husband and I lived in NJ from January to July 2020. He worked in NJ from January to May, then UC came. I worked in NY from January to March, then UC came. I never got any other income outside of New York while living in NJ. Then we moved to Pennsylvania on August, so that's the end of the NJ/NY complication.

Got your 2nd paragraph the way you said and I have the same number for New York's tax on New York income as the NY return in the system. So far, so good!

Now, following your 3rd paragraph, there's no tax reported to NJ on my NY W2. Question, should I do the math for my NY W2 only or should I add my husband's NJ W2. I am not sure if NY taxed his W2 as we're filling jointly. I believe the answer is no, but I rather double check.

So, if it only taxes my NY income then 100% of that income was double taxed. Meaning that if my NY income was 8K, then that's the amount double taxed, if so then we have checked the 3rd paragraph.

Fourth paragraph checked too.

As all my money was made in NY only, I did as follows:

NY Tax allocation = $1,849

(NY UC = $31,375) + (NY W2 total income = $8,243) = NY TOTAL INCOME $ 39,618

Double taxed income = $8,243 (100% of my W2 NY income)

Double taxed income by NY = $8,243 divided by $39,618 = 0.208 = 21%
Double taxed income by NJ =   21% * $39,618 = $8,243 (Goes in Box1 in screenshot)

NY tax on double taxed income= 21% * $1,849 = $384.7 (Box 2 in screenshot)

IS ALL THIS OK? :(

Will NJ calculate the credit automatically after I fill in this info or do I do that as well?

YOU ARE AN ANGEL!

[DanielV01]

@rebazambrano

Your numbers are spot on from what you state above.  The fields on the NJ return probably do not pre-populate, but you will input the "double taxed" income figure you just calculated and the Tax paid to New York on that income you also calculated in those two fields in the screenshot you provided in your original question.  The credit will calculate automatically, and it will be the lower of:

• What New York taxes the income
• What New Jersey taxes the income

Chances are, after the credit is applied, your New Jersey tax will be $0.

[wenwang]

hello Daniel, 

I wish to pick your expertise on this. I always worked for a company in NY in 2022, but from Jan-March, I lived in NY, then I moved to NJ for the rest of the year. 

there are two states reported in my W2, for NY, the box 16 is my entire wages say 150000 (also my total income), then for NJ the box 16 has a smaller number say 110000, the "amount taxed by NY state" is 140993, and the "allocated NYS tax amount" is 8786. 

I have trouble trying to get the "double taxed income while a resident of NJ" and "tax paid to NY", do I need to prorate the 150000 given I lived in both states? e.g., about a quarter of the time lived in NY, so the double taxed amount is like 3 quarters of the total income?

and where do i get "tax paid to NY"?

Thanks so much!!!

[MarilynG1]

All you really need to know is how long you lived in each state, and how much tax you paid to each state (from your W-2) to file your Part-Year Resident Returns for New Jersey and New York.  Prepare New York first, then New Jersey. 

For example, New York will look at your total income, then figure the tax on that amount.  Then they will take 25% of that tax (for 3 months you lived there) and that's how much tax you owe them.  Then they will look at the tax you paid them (as shown on your W-2) and figure out if you owe or get a refund.  TurboTax will do the calculations for you. 

For New Jersey, you report the income you earned while living there.  It sounds like your W-2 has the correct amount (about 110K; 150K/12 * 9).  They calculate tax on that amount, then figure if you owe or get a refund (based on NJ tax paid on your W-2).  You really shouldn't need to do any calculations with a W-2;  TurboTax will do them for you, as long as you reported the dates you lived in each state. 

Here's some info on Allocating Income as a Part-Year Resident. 

[wenwang]

thank you so much you are an angel!

I guess i was initially confused by the fact that NJ state box 16 has a lower amount than the NY state box 16, you are probably right that they the NJ one already made the taxable amount (aka the 110k). I realized there's another box "how much of the xxxx (110K) did you earn while you live or work in NJ?", i think i will just enter the 110K directly, right?

I used to allocate the 110K but now i think it is wrong. it should be the entire 110K

[wenwang]

thank you so much! 

I am kind of also stuck in below - based on my understanding, the "double taxed income while a resident of new jersey" is the 110K (from my W2 NJ box 16), but the 2nd line - "tax paid to New York", I thought it would just be W2 NY box 17, however, it says it is not from W2 but from other state return (NY), below is the photo of NY state tax return summary, can you please enlighten me which number I should use? or some calculation that I need to do?

[JosephS1]

Out of state or taxes paid to another state are based on the final calculations of the nonresident return.  For instance, if you are a NJ resident working in NY and your NY nonresident return showed a final state tax due of $5,000, the out of state credit would be $5,000 applied on your NJ return.  Even if you had $6,000 withheld, your credit would be $5,000 as you would file your NY nonresident return to claim the $1,000 refund.

As long as you enter your nonresident return information in the state entry area before your resident return information, the program should accurately calculate the out of state credit to be applied on your resident return.

@wenwang

[wenwang]

Appreciate the insights Joseph!

Oddly this time Turbotax didn't really pre-populate the info for me, it was empty even though my NY non-resident portion is done first 

looking at my above NY state tax summary page, is it correct to understand the NY state tax due is the line"allocated NYS tax" $8786?

[JosephS1]

Looking at your screenshot I would agree with the $8786 for the state credit.  I would also look for the additional credit for tax paid to NYC before filing.  Go to Tax Tools, on the left side of your screen, click on Tools, then view tax summary and check both the NY Tax summary and the NJ tax summary.  Do this before you file so as to be sure you are getting the credit you are entitled to.  Hope I helped.

[Greenpasture777]

I have a smilier situation, but not sure what values to put in. Filing jointly, both lived in new York (33% of year) then moved to New Jersey (67% of year). Partner income source is always New York, even after moving to NJ. My income source is always NJ.  I put in the approximations on federal and NY state returns and received screenshot outcome below. Now doing the NJ state tax return. What do I put in screen shot box 1 on the NJ state tax return for the double taxed income for New Jersey? Would it be the 177,045 taxed by New York? 

For the 2nd box on NJ tax form, tax paid to New York, would it be  NY State + NY City withholding, which is $6,578? , or what is shown as final taxes I owe NY which is $2,147? Spinning here so appreciate the help. 

[MarilynG1]

Yes, enter the 177K as double-taxed income.

Enter the $2,147 as Tax Paid to NY (final tax amount paid).

@Greenpasture777 

[Greenpasture777]

Thank you @MarilynG1 ! 

[jdarling20]

@MarilynG1 ,

Like others, I lived in NY for the first part of the year and then moved to NJ for the remainder. I worked in NYC the whole time.

On my W2, I have two pages, one for NY and one for NJ. On my NJ page, I see a separate card with NYC as the locality listing out about 60k in box 18 local wages, with about 2k in box 19 local income tax. My NJ State income on this page is about 54k.

I'm wondering if I should use the 60k and 2k numbers for the first and second boxes for the credit? For reference, my NY State income is closer to 100k.