NJ has not paid my 2022 refund and keeps asking for mor info. Now they are requesting a wage allocation form becasue they said "Based on my 2022 W2, you reported wages much less than NJ state wages".
I get both a NJ and DE W2 and both have my full income on them so I assume they think I made the money in NJ but I already claimed it as Delaware.
Does anyone know how to get to this form?
Each state with an income tax has laws that require non-residents to pay income tax on work that is physically carried out within its borders. So, in order to be in compliance with these laws, you must keep track of the income you earn in those non-resident states. You must file a non-resident tax return in each state in which your income exceeds that state's filing threshold for non-residents. The only exception would be if your resident state has a reciprocity agreement with the non-resident state.
When two states have a reciprocity agreement with each other, a taxpayer who lives in one state but works in the other only has to file taxes in his or her home state. Kentucky, for example, has reciprocity agreements with seven other states. Unfortunately for you, Delaware does not have a reciprocity agreement with any other state.
You can find a given state's filing threshold for non-residents on its tax website. Be aware that the filing threshold for some states is based on the taxpayer's total earnings from all sources, not just on the earnings from the particular state.
Some large companies now have payroll systems that allow them to track and even to pay withholding taxes for their employees' non-resident state earnings, but this is still uncommon. In most cases, it's up to the employee to keep track.
Federal law prohibits two states from charging income tax on the same dollars, so your home state of DE will allow you to claim a credit on its tax return for the taxes you pay to non-resident states. This in effect prevents double taxation.
@RLEACH1 wrote:
I get both a NJ and DE W2 and both have my full income on them
Do both W-2s have your full income in box 16? The same amount in box 16 of both W-2s? One has NJ in box 15 and one has DE in box 15?
@RLEACH1 wrote:
I assume they think I made the money in NJ but I already claimed it as Delaware.
It doesn't matter where you "claimed" the income. What matters is where you actually worked. If you did not live in NJ, and you did not work in NJ at all, why did you get a NJ W-2, and why are you filing a NJ nonresident tax return? Did you work part of the time in NJ and part of the time in DE? What state did you live in in 2022?
Your income is subject to tax by the state where you earned it. All of your income is subject to tax by the state that you lived in, but on your tax return for the state that you lived in you should get a credit for part or all of the tax that you paid to the other state that you worked in.
To elaborate on @rjs 's answer:
If you're a resident of NJ, then ALL your income is taxable by NJ, regardless of where you earned it.
If you're a resident of NJ who worked in DE, then your work income is also taxable by DE. If that's your situation, then you must file both a non-resident DE tax return and a home state NJ tax return. In that circumstance you would be able to claim a credit on your NJ return for the taxes paid to DE on the dollars taxed by both states, so that in effect you would not be double-taxed.
Thanks, that makes sense. I live in Delaware and mainly work out of my home office. I have an office in NJ which is I guess where my company says I am based. I am in sales though so I am working in NJ, DE, PA, VA, MD. Would I need to figure out how much money I made from sales in each state? That seems like a huge process. Is there a general way this would normally be handled? Thanks again!
Each state with an income tax has laws that require non-residents to pay income tax on work that is physically carried out within its borders. So, in order to be in compliance with these laws, you must keep track of the income you earn in those non-resident states. You must file a non-resident tax return in each state in which your income exceeds that state's filing threshold for non-residents. The only exception would be if your resident state has a reciprocity agreement with the non-resident state.
When two states have a reciprocity agreement with each other, a taxpayer who lives in one state but works in the other only has to file taxes in his or her home state. Kentucky, for example, has reciprocity agreements with seven other states. Unfortunately for you, Delaware does not have a reciprocity agreement with any other state.
You can find a given state's filing threshold for non-residents on its tax website. Be aware that the filing threshold for some states is based on the taxpayer's total earnings from all sources, not just on the earnings from the particular state.
Some large companies now have payroll systems that allow them to track and even to pay withholding taxes for their employees' non-resident state earnings, but this is still uncommon. In most cases, it's up to the employee to keep track.
Federal law prohibits two states from charging income tax on the same dollars, so your home state of DE will allow you to claim a credit on its tax return for the taxes you pay to non-resident states. This in effect prevents double taxation.