Live and work in NJ but have NY W2 due to RSU and accrued dividends. How to do NJ and NY state taxes in TurboTax?

[mzhu]

Hi there, 

My work location (the same company) was changed from NY to NJ after May 2019, i.e. I worked in NY but lived in NJ before May 2019, and have been working and living in NJ since June 2019.

I have two W2 forms for 2021, one for NJ and one for NY. There were a few paychecks for RSU vesting and accrued stock dividends paid in 2021. Federal tax, NJ tax, NY tax, etc. were deducted from those paychecks. In particular, regarding NY state tax,  

• RSU 03/01/2018 (award date) - 03/01/2021 (vested date): x1 was deducted.
• RSU 02/01/2019 (award date) - 02/01/2021 (vested date): x2 was deducted.
• Accrued stock dividends 05/21/2019 - 02/01/2021: x3 was deducted.
• Accrued stock dividends 05/21/2019 - 03/01/2021: x4 was deducted.

So x1+x2+x3+x4 was deducted as NY state income tax and was reported in box 17 on the NY W2. Box 16 reports the total wage (this number is slightly smaller than that on the NJ W2). The other boxes are empty on the NY W2. 

I am wondering if someone can advise how I should complete the NJ and NY state taxes in TurboTax. Thank you so much!

[ErnieS0 · Accepted solution]

Your RSU and accrued dividends are taxable to New York because they are based on work performed in New York (even though you received the income while living and working in New Jersey).

NY requires employers to report total income earned everywhere in Box 16, including amounts earned outside NY.

Adjust this amount in TurboTax to report the correct amount of income from the RSUs and dividends only.

1. On New York Income Allocation, say No to Were all of your wages and/or your self-employment income earned in New York State?
2. Edit Your W-2 on Your Form W-2 Summary
3. Choose Allocate by Number or Days or Allocate by Percentage on Allocate Wages to New York (percentage is usually the easier calculation)

If you cashed your RSUs and they were separately reported on a Form 1099-B then report only the amount of capital gain from those transaction as NY capital gains.

[mzhu]

Thank you very much!

Could you advise on how to calculate the allocation (days or percentage) in details? For example, RSU 03/01/2018 (award date) - 03/01/2021 (vested date) and accrued stock dividends 05/21/2019 - 02/01/2021.