Property tax deduction on one property in NY and NJ. Confused.

[trjpkhouse]

I am filing state returns in NY where I work (non resident) and NJ - where I live. TT deluxe is suggesting a property tax deduction on my NJ1040 return and recommends that I itemize on IT-196 and also claim the property tax deduction on this form. I only have one house in New Jersey. Is this correct. It seems like double dipping to me.  I am only itemizing on NY, not of the federal return. 

[trjpkhouse]

Thanks Terri - this is interesting as I paid to have the turbotax expert go through the return and they agreed that TT was advising correctly to deduct the property tax as an itemized deduction for NY even though I live in NJ. The expert could see that I was filing a non-resident NY return (work) and resident NJ return (where I live). There seem to have been a few people here asking the same question, and several people have answered that NY honors the schedule A itemized deductions - allowing NJ residents working in NY to claim the deduction and even asking them to itemize when they do not itemize on the federal return. The Q attached below is an example where the % income derived from NY is used to prorate the deduction for property tax on a non -resident return. Is the software making a mistake?

property taxes with two states and new york state itemized

when we have 2 states, say NJ and NY and the home is at NJ and paid property tax for NJ home. 

I found that the NY state return itemizing include this property tax as well. Is this correct? because that property tax was paid for NJ home. 

if not correct, how do I enter correctly or fix? as in federal tax section there is no section to select which state of property tax belongs to

posted

‎April 11, 2023 9:02 PM

last updated ‎April 11, 2023 9:02 PM

0

 5

 

 2,508

Reply

 ErnieS0

Expert Alumni

Yes. TurboTax is doing your taxes correctly. All federal itemized deductions are included on your New York return (that's how NY calculates taxes).

You don’t say whether you are filing a resident, part-year, or non-resident NY return.

If you are a resident, NY taxes all your income, so you can claim all your federal deductions.

If you are a part-year or non-resident, NY will prorate your itemized deductions according to the NY percentage of income versus total income. So if you earned 50% of your income in NY, you’ll get 50% of your itemized deductions.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

‎April 12, 2023 5:33 AM

1

Reply

[trjpkhouse]

Terri - I should have added that it is the TT program that is making the suggestion. The expert and I went through all the prompts and we could find no issues. 

[LenaH]

The TurboTax program is correctly deducting your real estate taxes on your nonresident NY return and your resident NJ return. It is not considered double dipping. On your IT-203, you can see that NY allows the itemized deduction for nonresidents on Line 33. This amount flows from the Form IT-196, which includes the deduction for property tax and mortgage interest. You can deduct these amounts for your one property located in NJ. 

Your total itemized deductions help determine your NY taxable income. This amount is then used to calculate your base tax. That base tax is then adjusted (or prorated) based on your income percentage of income earned in NY versus your total income. The calculation formula is written below for further clarification. If you have any further questions, please respond in the thread and we can assist you further. 

CALCULATION:

Federal Adjusted Gross Income

Less: Standard or Itemized Deduction

=New York Taxable Income

Less: Credits

=Amount used to calculate base tax (A)

Income percentage = NY AGI/Federal AGI = NY Income percentage (B)

Base tax (A) * income percentage (B) = Allocated NYS Tax

@trjpkhouse