I+my wife both live in NJ, and work in NY.
In our W-2 forms the box 17 is populated for NY only for total about 12k, and is empty for NJ. Basically I read it as we paid about 12k of income tax to NY, and paid nothing to NJ.
Now, after completing everything in TurboTax I have the following result:
I owe about 1k to Federals - OK.
I owe about 10k to NY.
NJ owes me about 9k.
Hence I owe about 2k in total.
I'm fine with the total result, but I'm completelly confused with the logic of these calculations. And I feel somewhere I made a mistake, most likely in the place where I was asked to remove duplicate incomes on the state level.
Why do we owe NY this much, as per our W-2 we have paid all or almost all income tax to NY?
Why NJ owes us anything - it didn't get a penny of our taxes?
I realize there is such thing as "tax credit", but I'm totally confused on how it works. Can someone explain, if the result I got is expected, or I have to re-verify it?
It appears your withholding (and possibly your income) is being credited to New Jersey rather than to NY. If you live in NJ and work in New York, you generally will not have any NJ income tax withheld because your credit for tax paid to NY usually offsets total NJ tax from your jobs because the NY tax rate is higher.
Your NJ-1040 should show $0 or a slight amount due (if, for example you had investment income). There would be no refund unless you had other withholding, because no NJ tax was withheld from your jobs.
Check your W-2s line 15-20. There should be a row for NY with state wages and state withholding. Confirm that is in the right place and not coded to NJ. There may also be a second row for NJ if NJ wages are different.
Then double check what wages you are removing from your NJ return. You should be removing NY wages.
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Thanks, looks I made a mistake while entering w-2. I mentioned NJ twice in line 15 (as you expected). After correcting the mistake now I owe NJ about 500 and NY owes me about 900, I also owe federals about 900. Now everything looks correct.
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