NYC resident working in NJ, filed NJ non resident first, shows a 5k bill due to nj and large refund from NY. Is this right ??

[WOrkInNJ_Live_NY]

My w2 shows entire earning was in NY state as well as NJ (2 page w2) most tax withheld for NYS and small amount for NJ.Worked full year in NJ and lived full year in NY. My w2 employer withheld taxes from both, most amount paid to NY and small amount to NJ. When I filed my non resident NJ tax, TurboTax shows I owe NJ ~ 5k to pay. Then when i file NY resident state tax it shows I am getting credit for the 5k bill plus what already paid to NJ as a credit and shows a large refund from NY. Very confused.  Shouldn’t this be other way around. I did file NJ non resident first and then NY, where it asks to remove one of the state so I remove NJ, then asks is all your money earned in nj , I say yes that’s when this large refund from ny show up. As a nys resident it seems I am not paying anything to ny instead getting back what my employer withheld. Is this right? again I am full year nyc resident, 

[maglib]

When you entered your w-2, you entered it as 1 w-2  with federal income and withholding proper taxable income and withholding from NJ and NY, correct (not 2 w-2's)?  During the Federal interview personal section you answered yes that you earned money in another state.  You completed your NJ non-resident return which you allocated all your wage income to NJ, note that NJ should have a higher amount of income than federal and NY and if it doesn't you will have to adjust the income as NJ taxes healthcare and other benefits, your employer should have that correct.  NJ tax rates are progressive at 1.4% to 8.97% <a rel="nofollow" target="_blank" href="https://www.tax-brackets.org/newjerseytaxtable">https://www.tax-brackets.org/newjerseytaxtable</a>. ... can not see your return as this is a public forum.   Then when you complete your NY return you will get taxed as if all income was earned in NY (all income is taxable to you domiciled state) at that tax rate and credited back for the double taxed income paid to NJ.  NY tax rate is higher but taxes on lower federal income 4-8.82%.  Since we can't see your return we  can not tell if you did it correctly but, it sounds correct and TT does the calculations for you.

[WOrkInNJ_Live_NY]

Thanks all for your response:

Correct,  1 w-2 with two pages, 2nd page showing NY state income and is lower than NJ. NJ non resident filing was on the higher income as listed on the W2, my employer somehow withheld only  small portion of the tax out for NJ income, and took a larger proportion of tax for NY. ( full year worked in NJ and lived only in NY full year ). What confusing is why there is even a page with "NY state" income, since i worked full year in NJ.  
my understanding, since the wages were earned in NJ, you must pay state tax to NJ for the wages earned, then NY state tax will be for every income such as dividend, interest and whatever other income if any was from NY.  I was initially under the impression that since i am a NY full year resident, i can pay the full tax to NY and get credit back on whatever my employer withheld for NJ and I do not have to file NJ. However, that's not the case.  since wages were earned in NJ i must file a NJ non resident first showing all the wages earned in NJ in w2 and taxes paid per w2.

1. when filing NJ, i remove NY income - there is a question asking to remove one of the state income -  and confirm the amount earned in NJ.

Result -   I have ~5K state tax to submit to NJ,

Question:  do  I have to e-file NJ first and pay, then e-file Federal and NY after NJ state return is accepted?

[TomD8]

TurboTax won't let you e-file a state return before you've e-filed your federal return.  Nor are you required to pay your NJ taxes due before you file your NY return.  Once all your returns are completed, I would just e-file them all at the same time.

[maglib]

You must prepare the NJ return first before you can prepare the NY.  Makes sense that you own NJ as a non-resident,  you should probably start paying quarterly estimated taxes going forward.  All income is always taxable to you home state, NY with a credit for taxes paid in the tax year that you owed.  You must e-file your federal return first,  in order to e-file any states.  You can wait till 4/15 to file all of them or file all now and wait till 4/15 to pay any taxes due.  Note if you owe a penalty in NJ, the longer you wait to pay, the larger the interest, if there is no penalty, just set the payment date to 4/15.

[WOrkInNJ_Live_NY]

Does efile for NY include a copy of my NON resident NJ FILING ? I only submitted my nys and fed and haven’t submitted my NJ yet. Will do it before the 15th. Just curious does both state get a copy of your other state filing.  

[maglib]

your resident state gets a copy of the non-resident return

[WOrkInNJ_Live_NY]

Thank you very much maglib!

[TomD8 · Accepted solution]

I believe you did your returns correctly.

You completed the non-resident NJ return first, which was correct.

You should have a large tax bill due to NJ, because your employer mistakenly failed to withhold NJ taxes.

You should have a large refund due from NY, because you received a credit on your NY return for the taxes paid to NJ (which would include that $5K) and your employer withheld NY taxes.  Since NY taxes were already withheld all year, it's not a surprise that your refund from NY would be close to the amount of your NJ credit.