I was NJ remote worker for a NY company. I only had taxes withheld for NJ. Now it says I owe a lot of tax in NY. Is there anything I can do to avoid paying double taxes?

[daliu]

As the question states above. For extra detail, the company I worked for is based in a different state but is incorporated in NY and not in NJ, hence why I received W2s for both NY and NJ.

All my googling has shown is that if I withheld in NY then I could receive a credit back for NJ but since I only withheld for NJ I'm not sure if i can get a credit for taxes currently owed to NY. I also withheld the maximum amount for NJ.

[KrisD15]

Please clarify, does the company have office workspace you can use in New York? 

Do you work remotely because you asked to or because the company contracted you as a remote worker? 

[daliu]

The company has a NY office and I was approved and switched by my own choice to become a fulltime NJ remote worker in 2022 so I was entirely remote for 2023.

My understanding is that since I requested it, the NY convenience of employer rule would mean I have to pay taxes in NY, which I wasn't aware of until recently. However, I'm not sure why my company withheld tax for NJ rather than NY in that case.

[Vanessa A]

You are correct.  Since you are working for your own convenience, you do need to file a NY return claiming the income you earned while working remotely for NY.  

Your company likely withheld based on your address.  You do technically have a tax filing requirement for NJ too so that is why they likely withheld for NJ instead of NY.  You will want to contact your employer so they withhold for both states.  

To avoid paying double taxes, you will complete your NY return first and then you will take a credit for taxes pain to NY on your NJ return.  You will be asked this as you walk through the NJ return.  The credit you get may or may not result in a refund, it simply depends on if your taxes to NY are more or less than they are to NJ.  

NJ will not give you a credit of more than your tax liability on that income to NJ even if NY charged you more.  

You can use the tax liability to NY and NJ to ask your employer to withhold accordingly.  You will need to fill out a new NJ-W4 and an IT 2104  This will help you avoid the penalty for next year. 

[daliu]

Hi, thank you so much for your response. I have a couple of follow up questions:

Regarding "To avoid paying double taxes, you will complete your NY return first and then you will take a credit for taxes pain to NY on your NJ return.":

Do I need to submit the return for NY first? Is that possible in TurboTax to submit state returns at separate times? Or do you mean I should complete NY return and then move onto filling out NJ and then be able to submit everything at the same time?

[TomK2023]

Yes, you can file your state return at different times in TurboTax.   However, in your case you should fill out your NY return first, then your NJ return (so the correct information will transfer between the two states).

You can then file both state tax returns at the same if you want.