NY Resident, working remotely for a NJ Company. NJ Started taxing in September 2023

[mhaanraadts]

Hi,

I am a full-time NY Resident working for a company based in NJ. I'm a full-time remote worked out of NY since 2021. For the past few years I have only paid NY State tax, and only filed NY State taxes.

Starting 9/9/2023 NJ started to collect NJ Sales Taxes based on the income made from this date onwards. The total tax amount between NY and NJ per pay statement didn't change much (NY basically cut cut in half), but I'm a bit at a loss here:

• Why did NJ suddenly start taxing me? Looks like this law is impacting me? [NJ} P.L.2023, c.125 was enacted on July 21, 2023 and establishes a “convenience of the employer test” (convenience rule) for nonresident income sourcing. See: https://www.nj.gov/treasury/taxation/conveniencerule.shtml
• As far as taxes are concerned from my research I believe I need to:
  • Prepare Federal first
  • Then prepare NJ (I'm a NY Resident)
  • NY last

Do I need to do anything else manually? I guess that NY will give me a credit for taxes paid to NJ to protect from dual taxation, or will it be the other way around? This is so confusing!

Thank you.

[TomD8]

@mhaanraadts  wrote:

As far as taxes are concerned from my research I believe I need to:

• Prepare Federal first
• Then prepare NJ (I'm a NY Resident)
• NY last

Assuming that you're working remotely for your own convenience, then Yes, that is exactly what you need to do.

[mhaanraadts]

Yes, I am working remotely for my own convenience.

Do you happen to know which state will provide credits for taxes paid to the other state? Both NY and NJ have the convenience rule. This is very confusing. Thanks.

[TomD8 · Accepted solution]

You claim the "other state credit" on your home state's tax return.  In your case, NY will credit you for the taxes you pay to NJ on the dollars that are taxed by both states.  This prevents double taxation, which federal law prohibits.

This is why it is key in TurboTax to complete the non-resident state tax return before the home state return.  That sequence allows the program to correctly calculate and apply the credit.