As a New York resident with some New Jersey income, I file New York IT-112-R (NYS Resident Tax Credit) and New Jersey NJ-1040NR (Non-Resident Income Tax Return).
On New York's IT-112-R, there are the usual two columns for income everywhere (column A) and income sourced to the other state (column B). On line 17, you subtract "Total federal adjustments to income." For column A, that's easy because it comes directly from federal Schedule 1, line 22.
But what about column B there? The New York IT-112-R instructions say, "Enter in column B any federal adjustments to income that were allowed by the other taxing jurisdiction." It's unclear which federal adjustments are "allowed" on NJ-1040NR, because there's no explicit calculation of AGI on the N.J. form - just gross income and taxable income.
There's nothing in column B of NJ-1040NR (income sourced to N.J.) that appears to be an adjustment - at least nothing that comes off before line 29 ("Gross income"), and line 29 is the number used to calculate the in-state income percentage later applied to total tax. There are, however, some deductions like line 31, "Medical expenses" (including self-employment health premiums), but these appear only in column A (income from all sources) and only below the Gross income line, and aren't apportioned specifically to N.J. income sources.
Two questions:
1) I believe anything that isn't specifically apportioned to N.J. (that is, anything that doesn't appear specifically in column B of the NJ-1040NR and therefore doesn't figure into the numerator of the in-state income percentage) wouldn't be considered by New York to be an "adjustment to income allowed by the other taxing jurisdiction." Is that correct?
2) What would be considered to be such an adjustment for New York's IT-112-R, line 17B, then?
