How does NY give give credit to NJ as state tax credit?

[mcaopsy]

I live in NJ and work in NY. I understand that I have to file as resident of NJ and non-resident of NY. Since NY withheld NY state tax already, and after I file with NY stat tax, NY will give me a credit to cover NJ state tax.

However Turbotax is telling me that I paid 5000 NY state tax but I am only getting 3000 as credit for NJ. What's missing here? Does it mean the credit can only be a percentage of NY tax I paid?

[EdithM]

Generally a resident state will give a credit for taxes paid to a nonresident state for income which has been taxed by both.  So NJ would be giving the other state tax credit.  You should go through the nonresident state first, so the resident state can take that into account.  The other state tax credit is generally limited to the tax paid to the other state on the same income. 

New York will compute tax on total/federal income earned by nonresidents, and then apply a percentage of NY sourced income over total/federal income, to the tax.