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How to avoid being double taxed in NJ in TurboTax when I sold my rental house property in MA?

I sold my rental property in MA in 2023, MA is taxing me for the capital gain.  I am living in NJ as a full-year resident in 2023.  I am taxed by NJ for the capital gain made from this house sale in MA. In the past, I worked in 2 states in the same year, NJ only taxed the income that I made in NJ, but not from the other state.

May I ask how do I do in TurboTax to remove this double taxed capital gain from the NJ tax return? 

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1 Reply
Vanessa A
Expert Alumni

How to avoid being double taxed in NJ in TurboTax when I sold my rental house property in MA?

If NJ has been your home state for multiple years, then all income you have received while a resident of NJ is taxable income to NJ.  So, you may need to amend your NJ return to include income you did not include in prior years. 

 

The rental property you sold is taxable to MA as MA source income and then to NJ as income as a resident of NJ who gets to tax all income from all sources worldwide. 

 

In general, your home state will tax all in come from all sources.  What you will do is you will file a nonresident return for the states that you do not reside in, but you visit for work and earn money in.  When you file, you will fille out your nonresident states first.  Then you will fill out your resident state, claiming a credit for taxes paid to the nonresident states on your home state return.  You may or may not still end up owing money to your resident state depending on whether or not their tax rate is higher or lower than your nonresident state.  If the non resident state had a higher tax rate than your resident state, your credit will be limited to the amount of tax you would have paid to your resident state.  They will not give you a refund of the taxes you paid to the nonresident state. 

 

 

Multiple States

File Non Resident State Return

 

 

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