New Jersey and Arizona

[Pinevalleyite]

We moved to AZ from NJ in July. We have 4 W2s. Two have state tax taken out for NJ only which is correct. 1 has state tax taken out for AZ only which is correct as my employer changed my state as of that date. However I have 1 w2 from old stock options that were to expire and all tax was taken out for NJ only. When TurboTax transfers from federal to the states it asks me to break out. If I add the correct ones for each state and then take the other divided by 365 and multiply by the data in each state is that correct?

[ErnieS0]

No. The options are taxable when paid out, not when are were earned. I assume you received them as a last check around the time you moved to Arizona. In that case, I suggest putting the amount with your New Jersey income.

If you received the W-2 long after you moved to AZ and established residency, then it would be NJ and AZ income. You would add the amount to AZ and NJ and claim a tax credit on the AZ return for the amount of NJ tax on that income. You’d figure what percentage of NJ income that W-2 represents and then prorate the tax. For example, if it was 25% of your NJ income, then you use 25% of your NJ tax liability for purposes of computing the tax credit on your AZ return.

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[Pinevalleyite]

I actually received them when I was separated from that company in 2013 but I have 10 years before all expire so I do once a year and get a w2. Based on that does it change the was I should calculate the tax? It was February that I actually cashed them out.

[MaryK4 · Accepted solution]

You will only have to report the options on your New Jersey Part-Year income tax return since you were a resident in February when you cashed them.

@Pinevalleyite