Income Taxed in Another State--Which figure to enter Box 1 or Box 16.

[tanalin]

Quick query: I work in NJ but live in NY state. My income is from NJ and is taxed there. When I file the NY Tax return it asks: What  portion of your income is taxed by New Jersey. I have the NJ W2 and it lists 

Wages in Box 1

and in Box 16 State Wages. This number is higher as it includes monies that were directed to retirement 403 B acounts. Do I enter the "Amount Taxed By NJ" in Turbo Tax the amount listed in Box 1 or in Box 16. It makes a difference in terms of the amount of tax. 

Thanks! 

[AmyC]

Neither box is used. Look at your NJ return and locate the taxable income and tax liability.

To locate your taxable income and liability for NJ

1. Log into your return
2. Select state taxes
3. Enter the non-resident NJ  for which you need the liability
4. On the left, go to Tax Tools
5. Select Tools
6. Select View Tax Summary
7. You will see Summary of your NJ Return at the top.
8. Locate the line for taxable income
9. Locate the line that says Total Tax
10. Note those two numbers
11. Return to your resident NY return 
12. Enter the correct number when asked

[tanalin]

hi and huge thank you. But i don't have the online version only a paper version.

Wd the taxable income be box 27, entitled Total Income on the NJ NR return? the bottom line on the form. I can't paste the doc in here but the link is here: I only have an entry for line 15 and 27 is the same amount. 

https://www.nj.gov/treasury/taxation/pdf/current/1040nr.pdf

thanks again

[AmyC]

Line 39 is the taxable income and line 42 is the tax.

[tanalin]

I believe question that starts Turbo Tax : 

hi so this is what I was trying to fill. This figure would be from line 15, not 39 or 40. But my W2 form lists state wages in Box 16 and Wages in Box 1. So my question is do I enter box 1 or box 16 figure. Because money was directed to 403B plans, the amount in box 16 is higher than the amount in Box 1. thank you again for your time with this. 

[DianeW777]

Enter the box 1 amount because only that portion is included in your resident New York (NY) income, even though New Jersey taxes an amount that includes your 403(b) contributions.

[tanalin]

But -- since NJ taxes the line 16 amount, isn't that the correct amount to enter in the above area shown in the photo? I.e. the higher number? thanks

TL

[DianeW777 · Accepted solution]

No. NJ taxes wages differently than NY so for the NY return enter only the income that would be taxed by NY. 

The credit you receive is the amount of NJ tax or the tax NY would charge on that income under their rules. The fact that NJ taxes a higher amount of wages than NY, does not affect the amount that should be taxed by NY but it will affect the amount of credit you are allowed to receive. The credit is the lesser of what NY would charge in tax or the amount NJ does charge in tax. 

It can be a usual-unusual situation because of the way each state handles the contributions to a 403(b) plan. However, it is my belief that NY would not willingly give a higher credit than what they would charge for these same wages which would be allowed a reduction for the contribution if it were handled in their state versus NJ. I don't see this specifically in writing so I'll let you be the judge on what to enter. This could be a nonissue since it's likely the NY state tax would be higher in general.

• Income Tax by State: Which Has the Highest and Lowest Taxes?

@tanalin

[tanalin]

thank you. i think i 'm beginning to understand this. The issue is with TurboTax's wording: it explicitly states the "portion taxed by New Jersey," so I read that to mean the larger item 16 amount--because that is the amount they tax correct?  Am I wrong to be confused? I am not an accountant so I don't know where and on which forms these figures actually go, and haven't dug into this. 

huge thanks for your patience on this somewhat technical issue! ! 

[tanalin]

sorry to ask again but there are two boxes on the 1040NR form

29A   Income from all sources. NJ instructions say to include all income and to take the figure from box 16, the State wages box. This is higher since  monies were given to a 403B and this figure in Box 1 is lower 

 The NJ instructions are as follows: 

Line 15 – Wages, Salaries, Tips, etc. Column A

Enter the total of State wages, salaries, tips, bonuses, commissions, etc., from all employment both inside and outside New Jersey. Take the amount from box 16 of your W-2 (see sample below). Include all payments whether in cash, benefits, or property.

My question is for line 29B , which is "Amount from New Jersey Sources"

In this box, do I enter Box 1 (the smaller figure), or Box 16 (which includes as you note, income regardless of the fact that a portion of it was directed into a 403B. 

thanks again

I work in New Jersey but live in NY. But by entering the lower number from Box 1 in 29B, my total state tax liability is oddly 10% lower so it wd be advantageous to list Box 1 in line 29 B. 

Thanks again for your help.