In which state did I "earn" my wages and what part of my income is "attributed" to my remote work state?

[Zman8228]

Hello,

I have a couple questions that fit together regarding living in one state and working remotely in another.   I appreciate any help in advance.  For context, i live in WI and work remotely in NJ.   I have also posted snips for extra context

My questions are:

1) There are two different state wages listed on my W2.  My WI wages are the same as my Federal so that is easy enough to understand but my NJ state wages are exactly half of of my federal/WI.   No idea why that is.  But then TT asks me to "remove the wages for the state line that is a duplicate."  Is NJ a duplicate or WI?  I'm assuming NJ because it is half of WI but am unsure.  That is question 1.  Which one do i say to remove?    The amount i keep ends up filling in my NJ non-resident form "wages" line.  

2)  No matter which one i pick, TT then asks me if i earned all of those wages in NJ.  I don't know the correct answer.  My company is there but I am never there.  Does that mean I earned 100% or 0% from there?  

Thank you in advance!

[AmyC]

1. Remove WI and correct NJ.

• Live in WI, WI taxes all income and will give a credit for tax paid to other states.
• Work in NJ. NJ NR instructions state: You must file a nonresident return if you received income from a New Jersey source while you were a nonresident and your income for the entire year (not just your period of nonresidency) was more than the filing threshold for your filing status (see page 2). Only report income you earned while a nonresident of New Jersey.
• The IRS and states have received your W2 forms. This is your time to enter the correct information. Enter your W2 showing NJ with the correct wages earned there.  It sounds like all of your work was remote from NJ and the full amount of income should be entered for NJ wages. You may want to contact your employer and ask why the w2 shows only half of your income.

2. You work remote with NJ source income so 100% earned there.

Extra:

• If you had any WI tax withheld, you will need to enter it following my steps here.
• Complete NJ return first. WI will give you a credit. The credit will be the lower of the state tax liabilities on the same taxable income. You may owe your resident state,  if they have a higher tax rate along with differences in how the taxable income is calculated.

[Zman8228]

Thank you for your reply!  Though I think I made a mistake as I reexamined things.  

Does it change anything if my company's headquarters (and hence the address on the W2) is in Michigan?  So I live in WI, the rest of my team and division is in NJ but the company is out of MI? 

Yet they company withdrew NJ taxes.  Funny enough, i just went and checked my latest pay stub and I'm not paying NJ state taxes anymore.

Edit: Yep, it's a mistake.  Company mistakenly withdrew NJ taxes for half of last year which is why my state taxes for NJ are equal to half of my total wages.     

[DMarkM1]

That is correct since you never physically worked in NJ there is no NJ source income.  MI as the company HQ is not a factor either.  

You only file the nonresident NJ return to get those taxes refunded.   In the NJ interview be sure the residency shown is "nonresident" in the "General section."  Then in the "Income" section allocate "Zero" income/wages to NJ. 

Since you are getting the NJ taxes refunded you will not get/claim a credit on you WI return for taxes paid to another state. 

Going forward you only need to file as resident in WI.