NJ NY W2 Wages

[ranibane0309]

Hi,

I saw some others post here about their NY NJ multiple W2 problem but didn’t exactly see the answer to my questions

I received two W2s for 2019 in separate envelopes. 

Back in Jan 2019, my employer’s payroll department was late in updating my location code from NY to NJ (even though I was working in NJ and not NY from 1/1/2019 and NJ is where I live also for entire 2019)

as a result on payroll of 1/6/2019 I have a small NY withholding

When

First W2 — state NJ - Full Federal income is mentioned against NJ also with NJ withholding X 

Second W2 - state NY - to my surprise here also full Federal income is mentioned against NY and the small withholding amount of the first pay of 2019 as mentioned above

Is this normal ? 
why is NY income shown the full amount? isn’t this double counting ? 

 Ideally I shouldn’t even be filing for NY tax this year had the small NY withholding 

secondly when I put the wages as shown on W2s the program shows me  a huge amount owed to NY and for NJ most of the amount as refund. 

Firstly isn’t this counter intuitive ?
that the state where I  lived and worked for the entire year almost is giving me a refund of most of the withheld tax (Due to credit for other jurisdiction) while the state where for a technicality I worked ( I actually didn’t ) is getting all the taxes! 
Is this how it works for people with NY NJ W2? 

Secondly , isn’t this also causing a  higher tax burden for me as NY taxes are higher than NJ? 

[rjs]

New York has a rule that the state wages in box 16 of your W-2 must be the same as the federal wages in box 1. That doesn't mean that you actually earned all the income in New York. On your New York tax return you will show how much was actually New York income.

Do not enter the W-2s as two separate W-2s in TurboTax. Enter the New Jersey W-2, and add the NY line of state information, boxes 15, 16, and 17 as a second line of state information on the same W-2.

When you do your New York tax return, you will get a screen with the heading "Your Form W-2 Summary." Click the Edit button for the W-2. It will ask you to select an allocation method. Select "Allocate by Percentage." On the next screen enter zero as the New York State Percentage. This will give you a full refund of all the New York tax that was withheld.

On your New Jersey tax return you will not get the credit for income tax paid to other jurisdictions because you are not paying any New York tax.

[ranibane0309]

Thanks so much.

I didn't enter two W2 separately, just added NJ and NJ as two rows on the same W2.

Even then turbotax showing amount owed to NY is  far more than NJ, in fact than NJ. 

(In fact, because of the withholding NJ has to refund)

I wonder it is doing the other tax jurisdiction credit and this will end up  paying more to NY and NJ.

How can I change that?

 I started working on NJ first and then NY on turbotax/state. Does which one I am reviewing first matter?

[rjs]

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@ranibane0309 wrote:

turbotax showing amount owed to NY is  far more than NJ, in fact than NJ. 

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Are you filing a New York nonresident return (Form IT-203)? The first screen in the New York interview asks about your residency status.

In the New York interview, did you allocate your wages as I described in my previous reply above? If it still says you owe money to New York, it sounds like you didn't do that. On Form IT-203, line 1 in the "New York State amount" column should be blank. Lines 17 and 19 should have zero in the "New York State amount" column. You should have a refund from New York of the full amount of NY tax withheld on your NY W-2. (This is all assuming that you do not have any other New York income that you haven't mentioned.)

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@ranibane0309 wrote:

I wonder it is doing the other tax jurisdiction credit and this will end up  paying more to NY and NJ.

How can I change that?

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On your New Jersey resident tax return (Form NJ-1040) you should not have any credit for income taxes paid to other jurisdictions. Form NJ-1040 line 42 should be blank. If there is an amount on line 42, go back to the credits section of the New Jersey interview. On the Summary of Taxes Paid to Other States click Edit on the New York line. On the screen that says "Tell us about the money you earned in New York" both boxes should be empty. If there is an amount in either box, delete it, then click Continue.

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@ranibane0309 wrote:

I started working on NJ first and then NY on turbotax/state. Does which one I am reviewing first matter?

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You should have worked on your New York nonresident tax return first, then your New Jersey resident tax return, but it doesn't really matter because you are not getting any credit for income taxes paid to other jurisdictions on the New Jersey return. When you are just reviewing the completed tax returns, it doesn't matter what order you review them in. You can go back and forth between them.

If you have further questions, it might be helpful to know whether you are using TurboTax Online or the CD/Download TurboTax software, and which edition (Basic, Deluxe, etc.). If you are using the CD/Download software, is it on a Windows computer or a Mac?

[ranibane0309]

Oh shoot! 

Seeing  that I owe a large amount to NY as per TurboTax (I am using online version Deluxe) I already made payment to NY in July when I filed extension and as NJ shows refund I didn’t pay or file extension.

Am I going to be penalized by NJ ?

I guess if I do what you suggest the numbers are going to change totally

Thanks so much for your replies

[ranibane0309]

Forgot to answer one of your question that yes I am filing New York nonresident return (Form IT-203).

Thanks so much for the  allocation by percentage suggestion

In addition to that I see that turbotax is also asking me to confirm duplicate wage and remove if necessary.

I didn't enter two W2s as I mentioned earlier but even so.

As I understand I should check the NY checkbox right?

[rjs]

Yes, you should check the box to remove the duplicate New York wages from your New Jersey tax return. The amount on Form NJ-1040 line 15 should be the same as box 16 on the NJ line of your W-2.