W-2 for wrong state

[MarylandMary]

Several years ago my son took a position in Manhattan and lived in New Jersey. He filed his state taxes as a non resident of New York and a resident of New Jersey. He only paid state taxes to New York, but because of the reciprocal relationship between the states, New Jersey gave him credit for the taxes paid to New York. In 2022 he moved to Manhattan and he filed part time resident returns to both states, again taxes only paid to New York. In 2023 he has now lived the entire 12 months in Manhattan and has only earned income in New York. For some unknown reason his company issued a W-2 for the state of New Jersey with full income and  no New Jersey taxes withheld. He also has a New York W-2 that shows state and local taxes paid to New York. There is no reason for a New Jersey W-2 since he did not live nor earned income in that state in 2023. He's been in touch with his payroll department questioning the W-2, but this year his company used a third party to issue the W-2's, so they have reached out to the third party and of course they are taking their time in responding. My question is how is income reported to the states? I know a little about how a W-3 is sent to social security, and that information can be shared from the IRS to the states, but will New Jersey get a copy of this W-2? Interestingly his previous W-2's federal copy always indicated both NY and NJ with appropriate income and taxes withheld. His federal copy W-2 this year from the third party only has NY with NY income and taxes withheld. Obviously he is concerned that New Jersey with send him a letter looking for their tax return.

[MonikaK1]

Based on the circumstances you described, you are correct: the employer shouldn't have shown New Jersey income on his W-2.

If your son leaves the New Jersey line off of the W-2 entered on his return, such as in TurboTax, New Jersey may eventually send him a notice and proposed tax assessment.

He could try contacting the New Jersey Division of Taxation for guidance. See this webpage for options.