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I didn't live or work for a New Jersey based job in 2024 but tax was withheld by previous employer for NJ too.

Dear Experts,

My previous employer was in NJ. Now I live in a different state. My previous employer paid me something in 2024 as an award for some work I did with them in the previous years. I didn't live in NJ in 2024 and didn't work for the previous employer in 2024 at all. But they issued me a W2 for 2024 because of that. However, for some reason they have withheld my state taxes for NJ and for my current state of residence.

I understand that I need to file an NJ state tax return. Is that correct? But I will report zero (0) income in NJ and work done for NJ based company. Correct? So essentially I should be getting the 100% refund from NJ. Right?

Please feel free to ask for clarifications.

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3 Replies
MaryK4
Employee Tax Expert

I didn't live or work for a New Jersey based job in 2024 but tax was withheld by previous employer for NJ too.

If you received income (bonus) related to employment in New Jersey, it is New Jersey source income and you will have to report and pay tax on it as a nonresident.  See Instructions for Form NJ-1040NR page 6.

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I didn't live or work for a New Jersey based job in 2024 but tax was withheld by previous employer for NJ too.

Hi @MaryK4,

So, do I pay taxes on it in my current state too? How do I report this income on my TurboTax so that it doesn't includes this income in my current state?

Also, this was a bonus for some work done in 2023 or before but received in 2024. Do I pay tax to NJ in 2024 for this and in my 2024 full year resident state too?

LenaH
Employee Tax Expert

I didn't live or work for a New Jersey based job in 2024 but tax was withheld by previous employer for NJ too.

It depends on the state you moved to. 

 

Generally, you will pay tax in your resident state on all of your income and also in the state the income was sourced. To avoid double taxation on the same income, you will get a credit of taxes paid in your resident state. In your situation, you would file a nonresident return in NJ which would show the bonus as taxable and a resident return in your current state where all of your income is taxable. It is best to complete the NJ return first, so that the credit of taxes paid is calculated correctly on your resident return. For detailed instructions, click here

 

Please note: If you moved to Pennsylvania, you won't qualify for a credit for taxes paid to New Jersey. You would simply file a NJ return to get the withholding refunded back to you that was withheld from your bonus. In this case, you would allocate $0 as taxable to NJ. This is due to the reciprocal agreement between NJ and PA. Under this agreement, compensation paid to PA residents from NJ is not subject to NJ income tax. 

 

@noviceattax 

 

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