How to file state income tax if you live in NY and work remotely in NY for NJ company most of the time, spending only a few weeks a year in the NJ company.

[karena027]

Employer reports entire salary on both ny and nj w-2, and withholds full taxes for each state.  How do I allocate state wages to each state?  Simply prorate days worked at office in nj... which state return to do first?

[KarenJ · Accepted solution]

If you live and work most of the time in NY, you will need to file a NY resident return.   You should allocate your income to the days you worked in NJ and file a NJ nonresident return declaring only the wages allocated to NJ workdays.  So if you worked 240 workdays for 2017 and 20 of them were in NJ, you would take your wages and multiply them by 20/240.  That would be your NJ source income. 

Please see below for how to complete a nonresident and resident state return in TurboTax.

Once you've determined that you need to file a nonresident state return, the first thing you want to do is make sure you've filled out the Personal Info section correctly:

1. With your return open, click the first tab, Personal Info.
2. Continue to the Your Personal Info Summary screen.
3. Scroll down to the last section, Other State Income, and click Edit.
4. At the Did you make money in any other states? question, answer Yes and make sure your nonresident state(s) are selected from the drop-down.
5. Click Continue to return to the Your Personal Info Summary screen.

After you finish your federal return, you'll automatically move to the State Taxes tab, where you'll see your nonresident state(s) listed in addition to your resident state.

To ensure accurate calculations, we strongly recommend preparing your nonresident state return before you prepare any resident or part-year state returns. More tips:

• Select the long form (if the option is available) even if TurboTax defaults to the short form.
• Only report the income attributable to the nonresident state.
• If preparing a nonresident return solely to recover erroneous tax withholdings, enter 0 on the screen that asks for the amount of income earned in that state. This will eliminate your tax liability for that state, resulting in a full refund.