NJ Resident All Year, but work location changed from NJ to NY (SAME EMPLOYER) mid year

[MLR_business]

Hello! I have a question that's a bit different from the usual Live in NJ / Work in NY situation. I am already aware of filing resident NJ and Non-Resident NY and applying credits to NJ for taxes paid to NY.

Context/details:

I was a resident in NJ for all of 2022 and worked in NJ for half of the year. Halfway through the year, my work location changed to NY but with the same employer.

At the end of 2022 I received W-2 forms for both NJ and NY. I only received one W-2 for NJ, so my income earned as both an employee/resident and my income that was earned just as a resident was all packed into one NJ W-2, since my employer remained the same.

On my NY return, I indicated on the Form IT-203 which earnings during the year came from NY sources only, and an adjustment was made. I owe a small amount to NY following this allocation... I think this seems correct.

Moving onto my NJ return, I did receive a credit for taxes paid to NY, but the software is still indicating that I owe $500+ to NJ. This surprises me because I did not expect to owe anything to NJ outside of taxes in investment income. My investment income for the year was ~$1,500 (only dividends and LT cap gains), so I don't think the $500+ owed can all be from investment income.

The Question(s):

1. Per the above, I thought I would not have owed anything to NJ outside of taxes on investment income, but it looks like the software is indicating I owe far more than that ($500+). Is there something I'm not considering or inputting incorrectly in my NJ return?
   
   
2. On my NY IT-203 form, in Column D to indicate what income during the year came from NY sources only, I used the amount of NY income indicated on my paystub for 2023, was this the correct approach or is this potentially impacting my issue in #1?

Thank you so much in advanced!

[Cynthiad66]

If there is an issue with the computation then it would most likely be in Question 2.  The allocation of income could be incorrect.

Question 1:  I am not able to determine if you entered anything incorrectly, but based on your description that does not seem to be an issue.

 

New York State amount column

Enter that part of the federal amount that represents services you performed in New York State as a nonresident. This amount cannot exceed the amount entered in the Federal amount column.

Allocation of nonresident income earned partially in New York State

If you earned your salary or wages both inside and outside of New York State, you must determine the amount that is allocable to New York State. This is not necessarily the amount shown in the State wages, tips, etc. box on your Form(s) W-2. To correctly determine your income earned in New York State, use one of the following methods:

• To allocate income that does not depend directly on the volume of business transacted (for example, wages), complete Schedule A, Allocation of wage and salary income to New York State, on Form IT-203-B to determine the amount earned in New York State.
• To allocate income from a termination agreement, covenant not to compete, stock option, restricted stock, or stock appreciation right, complete Form IT-203-F to determine the amount to allocate to New York State.
• To allocate income that depends entirely on the volume of business transacted, as in the case of a salesperson working on commission, divide your volume of business transacted in the state by your total volume of business transacted both in and out of New York State. (The location where the services or sales activities were actually performed determines where business is transacted.) Multiply your total income subject to allocation by this percentage. This is the amount allocated to New York State. Submit a schedule with your return showing how you computed this allocation.

NY Non-Resident Income

I hope this helps

[MLR_business]

Thanks Cynthiad66, where do I find the IT-203-B? When I look at the available forms in NY that might be related, I only see:

• IT 203 pg 1-2
• IT 203 pg 3-4
• Alloc Wk

None of these look like the IT-203-B Schedule A that you hyperlinked to. Can you please clarify?

Thanks again.

[ErnieS0]

Form IT-203-B refers to the nonresident allocation if you chose to allocate your New York wages by days worked in NY. This worksheet would only be used if allocated your NY wages in that manner.

New York requires employers to report all income earned everywhere in Box 16 (state wages). However you said you used the NY amount indicated on your paystub so I’m assuming you correctly allocated your NY income to show what you earned in NY only and used actual amounts, not days worked.

New Jersey residents are taxed on income earned everywhere. If you received two W-2s, one for New Jersey and one for New York, I’m assuming your employer started withholding NY tax when you began working there.

NJ does tax some benefits that NY does not, such as pre-tax retirement contributions, so you may owe for that difference. NJ will only give you credit for the actual income and tax paid to NY, so for example if the comparable NJ wage on $10k of NY income after adding back NJ adjustments is $15k, you can’t use $15k for the Other State Tax Credit because the $5k difference was never taxed by NY. 

However, there was also no NJ withholding on that amount.

Column D on the Part-Year Resident/Nonresident Allocation Worksheet should be the amount of NY wage. It should as if you did that computation correctly.

Common New Jersey wage adjustments include expense reimbursements included as NJ income, including meals and lodging, employee business expenses, and moving expenses.

Other wage adjustments include: 

• Employee elective amounts contributed to all types of pension plans other than a 401(k) plan
• Cafeteria plan contributions
• IRS section 137 adoption expense benefits
• IRC section 129 dependent care benefits