You only allocate in cases of nonresident or part-year resident states. Since you did not move to NJ, but commuted, your resident state all year was MN plus you have NJ nonresident income to be taxed there. MN is your full-year resident state and therefore taxes income no matter where it is earned. There is no allocation for MN; all wages are MN taxable. You will not even be asked to allocate on the MN resident return.
In the "My Info" section indicate you lived in MN on Dec 31st and did not live in any other states. Still in the "My Info" section scroll down to "Other State Income" and answer "Yes" you earned income in another state and select NJ. This will generate a full-year resident return for MN and a nonresident NJ return.
1) "when filling NJ state taxes, 2nd W2 for company Y, wage allocations appear broken out in boxes 15-17; when completing state tax for NJ do I only put state earned wages (box 16) as my gross income due to it’s already pre-allocated or do I put full box 1 wages (from 2nd W2, or both?) and indicate only what was earned in NJ (in box 16) was then allocated to NJ?" Your allocation to NJ will be the portion of income earned in NJ (box 16) from the NJ only W2. The NJ nonresident forms will automatically include wages from all sources in the calculation of the the NJ tax; you don't need to do anything to produce that figure, other than entering wages in the federal "Wages & Income" section. Take note of the income taxed and the NJ tax liability as those numbers will be used to claim a credit on your resident MN return.
2)" when doing MN state taxes, same question applies above but inverse. Also, do I add 1st W2 (company A) to either of the scenarios in response to above allocation? Assume this is automatically generated from federal?" As noted above there will not be any MN allocation; your resident state taxes income no matter where it is earned. This sets up double taxation on the NJ earned (taxed) income. After working the NJ nonresident return you can work the MN resident return. You will be able to claim a credit for taxes paid to another state to mitigate the double taxation on the NJ non-resident income. The income taxed by NJ and the NJ tax liability will flow automatically to your resident MN return.
3) I am provided a gross-up lump sum monthly to cover travel from MN to NJ and it’s reported on 2nd W2 allocated to MN (paid by 3rd party and provided gross up year end report); do I need to do anything with this as these wages and taxes are already captured on my W2 (ie any other special form or module I need to complete)? No. Nothing special. Just enter your W2s as received.
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