Multiple W2 Forms from Two States-Filing Issues

[ParkNYC]

Hi, we moved to NJ from NY in March 2024. I just received two W2 forms from the same employer, which makes sense (two states). There is one issue I don't understand, the total combined state wages are much higher that total Federal Wages (Box1). For example if Box 1 on both W2 forms is 120,000 and the State A (NY) is also 120,000 (although actual wages for 2 months should be let's say 30,000), State B wages on second W2 form (NJ) are 90,000, the total Box 1 also 120,000. Shouldn't the total state wages equal total wages Box 1? Am I being double taxed here and how should I input this data in TurboTax? I normally use W2 import, but I'm afraid it's going to make a mess. To make things worse there was an employer change in December 2024, so I'm expecting another set of W2 forms and there is also NYC (local) tax involved.

I'm also afraid that if I showed on my NY tax return that my wages were 120,000 and I paid only tax on 30,000 NY wages, they'd go ape and tell me to pay estimated taxes and penalty.

Any help will be appreciated.

[AmyC]

1. No. NY and NJ have different laws for calculating wages. 

2. Yes, do not import. The w2 forms went to the IRS and to the states. You will input on the w2 screen, the state section to show what was actually earned in which state. It sounds like NY $30,000 and NJ $90,000 might be your input.

[TomD8]

@ParkNYC --

New York has a rule for part-year residents who perform only part of their services in New York State.  In such cases, New York requires that the amount in Box 1 of the employee's W-2 match the New York state wages shown in Box 16.  See page 3 of this New York tax memorandum:

https://www.tax.ny.gov/pdf/memos/income/m02_3i.pdf

It's then up to the employee to allocate the income appropriately on his or her part-year resident NY tax return.

I can tell you that this quirk of New Yok law causes numerous similar questions to this forum.

[ParkNYC]

Thank you both @AmyC @TomD8.

Should I use payroll payslips to accurately calculate earnings and taxes for each month?

As i said, we moved to NJ in March, so according to this we should only pay NY taxes for January and February and rest for NJ. Unfortunately, the idiotic company didn't change this until July, so my wife paid NY taxes until end of June. Should we put NY earning for January and February only according to residency (W2 form for NY) or from January to July according to what the company did. I know they made a mistake charging my wife NY taxes for 6 months, but it's too late to argue with them. Please advise.

Also, isn't this going to cause problems when we'll file NY IT-203 form showing different earnings that on filed W2 forms?

Thank you

[TomD8]

After your move to NJ, did you or your wife continue to work for a New York employer?  If so, did you work in NY, or remotely from NJ?

[ParkNYC]

@TomD8It's a little bit complicated. She's been working remotely for years, also in 2024. She worked from March remotely from NJ home for employer with the HQ in Texas, but according to their payroll and HR department her main office was in NYC. After pressing them about the issue, since the company also has an office in NJ and she works remotely and never goes to the NYC office, they changed her office address from NYC to NJ in June and they stopped withdrawing NY taxes, but not 100%. They continued to withdraw her NY SDI and NY PFL for another few months, after we complained they stopped. From June 2024 they started withdrawing only NJ payroll taxes. Now, she received two W2 forms from her employer. One for NJ and one for NY, as I said the NJ W2 form shows properly total state wages (lower that federal), but NY form wages match her total federal wages. Her NYC local wages properly show wages for two months as it should. I also own a NY S corporation, but I know that I have to file nonresident IT-203 because I conduct my business in NYC exclusively. My main goal it to properly file state taxes, especially NY, since this is the last year we'd have to deal with multi residency.

Questions:

1. As @AmyC mentioned I'd have to manually input her W2 forms in TurboTax. 

If I understand correctly, I could combine  both W2 forms together and manually adjust state wages (same employer Fed. tax ID number). So, NJ wages would match actual NJ state wages on W2 forms, but NY wages should be changed. Also, correctly me if I'm wrong please, those NJ and NY state wages combined have to match federal wages on box 1.

2. Since they stopped withdrawing her local NYC taxes in the last week of February 2024, can I use that total NYC wage amount (listed on her W2 as local wages) also as NY state wages? It would make sense since the end of February was our last day of residency in NY state.

3. Since I'm obligated to pay taxes for my NY S corp in New York, how do I take credit for taxes paid to NY on my NJ return to avoid double taxation? I'm talking about NY payroll withholding taxes and federal pass trough taxes reported on NY IT-203 part year resident and Federal 1040. Those taxes were reported and paid on NY and Federal returns, I don't think I should pay them also in New Jersey, since it was taxed by NY and the IRS already. Does NJ have same tax allocation worksheet like NY? Please advise.

Thank you for your help!