NJ underpayment penalty because of interest income? Taxes already overpaid to NY for wages

[NJ_Devils]

I have tax credit for my wages earned / paid in New York, but I'm getting an "underpayment penalty" for New Jersey because of income taxes due on my interest income.

Now, the NJ tax due is only a few hundred dollars (roughly $450) vs my total state tax paid to NY of $10k+ (I'm due a refund of $3k+ because I overpaid state taxes for my wages), but somehow I'm still being asked for an underpayment penalty on my NJ return. Wanted to know if others here have faced something similar and if we can ask for a waiver?

[fanfare]

"because of income taxes due on my interest income"

Why do you say that?  the penalty calculation doesn't care what your income sources are.

The penalty is based on your net tax after credit for NY tax paid.

@NJ_Devils 

[NJ_Devils]

I would have gotten tax credit for taxes paid to NY if it wasnt interest income.

Since interest income isn't considered NY source income, I can't just use my overpayment on NY taxes to cover for it.

[fanfare]

"I can't just use my overpayment on NY taxes"

You don't get credit for overpayment, you get credit for tax .

@NJ_Devils