Multi-state Tax Filing Questions

[Benwol94]

Hi,

I have a couple of questions regarding multi-state tax filing.

Scenario: My wife and I are full-time residents of New Jersey.  For part of 2022, I worked for a company based out of New York State and had New York State taxes withheld, but did not have New Jersey taxes withheld.  I then switched jobs to a company based out of New Jersey and had new Jersey taxes withheld.  My wife worked the entire year for a company based out of New York State and had New York State taxes withheld, but did not have New Jersey taxes withheld.

Questions:

1-For our New York State filing, do we only need to report income earned from New York State sources (meaning income from the first company that I worked for in 2022 and the company that my wife worked for during the entire year)?  And if yes, do we just attribute 100% of all of that income as being earned in New York State?

2-For New Jersey, will the software take into account that my second employer withheld New Jersey state taxes, but my first employer and my wife's employer did not?

Thank you.

[AmyC]

1. a. Yes, as nonresidents, NY will tax only the income earned from NY sources.

1. b. Yes

2. Yes. NJ will give you a credit for the lower of tax paid to NY or NJ tax on the income. 

[Benwol94]

Thank you.  I have a follow-up regarding the following section.  Since I earned part of my full year's income from a New York State income source and part of it from a non-New York State income source, do I answer Yes or No?  I already answered the prior question of "Did you allocate your income to New York based on the volume of business transacted?" as No.

Thank you.

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Nonresident Business Allocation

An allocation of business income must be made if you are a nonresident and you carry on business both in and out of New York State.

Do you need to fill out the Nonresident Business Allocation Schedule to allocate New York State business income?

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[DianeW777]

You answered correctly. When you are in the New York (NY) state return interview you will be asked about income allocation.  The following questions refer to business income.

• If you see the following question answer No- 'Did you allocate your income to NY based on volume of business transacted?' 
• And again to the question 'Do you need to fill out the Nonresident Business Allocation Schedule to allocate New York State business income?'
• See the images below for assistance. If any deductions need to be allocated you would enter the NY portion as well (not likely).

New Jersey (NJ) will give you credit for taxed paid to another state on the same income.  The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income.  As the resident state all worldwide income must be included.

The credit for tax paid to another state on the same income will be the lesser of:

1. the tax liability actually charged by the nonresident state, OR
2. the tax liability that would have been charged by your resident state

@Benwol94