I work innew jersey and live in delaware, why is delaware taxing me so much?

[DanielV01 · Accepted solution]

It depends.  When you live in one state and work in another, both states tax you.   You are taxed in New Jersey as a nonresident, and taxed in Delaware as a resident.  Delaware, however, does give you a credit for taxes you pay to another state.  You want to prepare the NJ nonresident return first to assist TurboTax to accurately calculate the credit.

In the NJ return, you want to make sure that any line on your W-2 that is listed as DE in box 15 is not included for NJ taxes.  This way your NJ return is calculated correctly, which may increase your NJ refund.  However, Delaware may tax your income more than what New Jersey does.  If this is the case, and you have not made estimated payments to Delaware, you may still owe an amount to Delaware on your return.

[Caleb0]

So, at the end of the year, after all returns are complete, what would my total state level tax rate be for both NJ and Delaware combined? Say for example I make $70,000 a year and don't have any unusual circumstances. 

[kgerman007]

I worked in DE in 2020 and didn't acknowledge box 16 as DE withholdings. I report box 16 withholding as my NJ tax withheld. Now I have to amend my return to claim the credit provided for tax received by DE to reduce a balance owed with the state of NJ. No problem there.

Im looking for assistance on how to file with the state of DE to reclaim those monies paid. Is that the process or do I simply take my credits on my NJ return for monies withheld by the stae of DE?

[TomD8]

@kgerman007 --

"I worked in DE in 2020 and didn't acknowledge box 16 as DE withholdings."

Could you giver more detail?  Are you saying that your 2020 W-2 showed DE withholdings, but that you failed to enter them into your non-resident DE return?

[kgerman007]

Yes. I reported the withholding value in in box 16 as NJ withholding. I was unaware it was DE withholding. I assume I need to do a DE non resident form for 2020 to claim those funds and amend my nj 2020 return to receive credit for taxes paid to DE

[TomD8]

@kgerman007 --

Yes.  If you never filed a 2020 DE non-resident tax return, you should do so now.  All the income you earned by working in DE is taxable by DE.  Note that you must use a 2020 desktop version of TurboTax to file a 2020 return.  If necessary, you can purchase that here:

https://turbotax.intuit.com/personal-taxes/past-years-products/2020/

You cannot file a 2020 return online.  You must print and mail it.

Once your 2020 DE return has been processed, you can then amend your 2020 NJ return to correct the withholdings and to claim the "other state credit" for the taxes paid to DE.  Note that in order to claim a refund, the amended return must be filed within three years from the original due date of the return or two years from the time the tax was paid, whichever is later.  An amended return must be paper-filed.