I work in NYC but moved to NJ on 03/01/17. How do I calculate my Double-taxed income as a NJ resident? . How do I calculate the tax paid to New York?

[DanielV01 · Accepted solution]

Double-taxed income is income that both states are taxing at the same time.  New York is taxing you as a nonresident, and NJ as a resident, for the portion of the year that you were living in New Jersey.

To file this, first prepare a New York part-year return.  The New York return will tax all of your income, since all was earned in New York.  But New York will divide the income between your resident portion (January and February), and the nonresident portion (March through December) that is the double-taxed income.  The New York return will ask how much of your income is the nonresident portion.  In the box you can input the box 16 amount of your W-2 reported on the NJ line (line where box 15 says NJ).  In addition, if you moved from NYC, also make sure that your move date from NYC has been inputted, because NYC does not tax a nonresident of the city.

After you have prepared the New York return, prepare the New Jersey part-year return.  Because of reporting and  programming requirements,  the NJ return will add the amounts reported to each state together.  At the end of this answer, you will see a key screen, and a box you must select to remove the double-reported income, so that the correct income is taxed.  Then later, you are asked about the double-taxed income.  If you have prepared the New York return first, the amount should be pre-calculated. If you don't see it, comment so that I can assist you to manually enter.  It will take a little calculation because of your NY residency status.

Here is the key screen on the NJ return to remove the double-reported income:  

[donxhas]

Thanks for the detailed response.  The Double-taxed income isn't pre-calculated for me even though I did the New York return first.  Right now I entered the NYC non-resident portion (March through December income) as the double-taxed income but I'm still unsure if that's correct and what the tax amount should be (it's also blank).  Thanks again for your help.

[DanielV01]

You've got the correct income, but now you need the tax.  To figure this out, take the amount of tax withheld, and subtract the amount of NY refund for your return.  If you owe New York, add the amount you owe to NY into this figure.  Next, divide the NJ income amount by the NY (full income) amount, which gives you the percentage of income that was double taxed.  Multiply this percentage by the adjusted tax amount above, and that is the amount of NY tax that was assessed on the double-taxed income.  The NJ credit will either be that tax amount, or the amount of tax that NJ is assessing on the same income.  Your NJ tax will not go below zero, and you will not be refunded by NJ for "extra" tax you pay to NY on this income.  The following NJ website describes the credit:  <a rel="nofollow" target="_blank" href="http://www.state.nj.us/treasury/taxation/njit14.shtml">http://www.state.nj.us/treasury/taxation/njit...>

[donxhas]

Okay got it.  I just have a couple more questions and I think I'm good to go.  

On the "Money you already gave them" section of my New York Return, I have both a State Tax Withholding and a NYC Tax Withholding.  I'm assuming I'm adding both together as the total tax withheld for the New York return?

Also, when I began the "Summary of Taxes Paid to Other States" section to enter the calculated double tax amounts, it says to choose "None Selected" if the other jurisdiction is a locality such as NYC.  I've been selecting New York from the dropdown since the State Tax return I'm doing is New York, but should I be putting "None Selected" since I work in NYC?

[DanielV01]

First question:  correct.  Both the state and NYC tax withholding are included on the NY State return.  Second question:  you do select NY.  "None Selected" is if you are exclusively taxed in NYC, which is not the case.  But the NYC tax truly needs to be factored out of the equation, because you should only be taxed in NYC for the period of time you were living in NYC.  Once you moved to NJ, NYC no longer taxes you.  To find this amount you will need to go back to the NY review screen, and see if there is a tax liability amount separated for NYC.  If there is, subtract that amount from your total NY tax liability as well (the equation I gave you in my last comment), before multiplying by your NJ percentage.
 However, if the NYC amount is not in the review, you can only estimate by multiplying your NYC tax withholding by 16.67%, which is approximately the correct amount.  Use that number to subtract from your NYS adjusted tax liability, and then multiply by the NJ percentage.  That will lower your NY tax somewhat but I don't think it will change your overall result.  I believe you will still receive enough credit to bring your NJ tax down to zero.

[rebazambrano]

Hi! I am having a similar issue but I never lived in NY so I am filling as a non-resident (married jointly) and both my husband and I got UC (I got it from NY, he did from NJ). We lived in NJ from January to the end of July.

Would the same formula apply to calculate the double taxed income? Does the tax paid to NY refers to the total tax paid to NY for the full year (UC taxed all year) or does it refer to the portion of taxes paid while living in NJ? If so, how do I calculate this. It also confuses me that at the bottom says: "Do not enter the income amount and taxes withheld from your W2. We need actual numbers from your other state's tax return"
These are the NYS numbers from the system

[jkpanda]

Hi, I am facing a similar issue. Did you figure out how to calculate this properly?