Why has my New Jersey tax amount changed dramatically after filing married jointly?

[sfoksn]

We did not know that we only had to file one joint return under one account when MFJ, and when we found out, we started working on compiling all the income information to one account to file jointly.

Before we combined the incomes, NJ state tax information showed:

Income
Wages and Salaries: 27284

Personal exemptions: 2000

Taxes
New Jersey Income tax: 1876
nonresident subtraction from income tax: -1282 (we live in NY and I work in NJ, my husband does not)

Credits: none

Payments
New Jersey Tax withholding: 870
Estimated and other payment: 0

However, after we combined all our income information into one, now NJ tax information shows:

Income
Wages and Salaries: 27284

Exemptions: 2000

Taxes
New Jersey Income tax: 10176
Nonresident Subtraction from Income tax: -8962

Credits: none

Payments
New Jersey Tax withholding: 870
Estimated and other payments: 0

How come our New Jersey income tax and Nonresident subraction from income tax has jumped so much after compiling our income data together under one account?

Thanks!

[BillM223]

You must have made a typo - there is no way that a New Jersey income for the two of you of $27,284 could possibly lead to a New Jersey tax of $10,176.

Is it possible that your New Jersey income is actually much greater? Do you have sources other than Wages? Didn't your wages amount increase when you entered both spouses incomes together?

[sfoksn]

@BillM223  Thanks for your reply.  That is why I am confused as well.  

My husband does not have any NJ income, only I do.  Only 27284 of our combined wages is from NJ.  We do have 1099 income from our self employment businesses but none of them are from NJ. 

Under Tax Tools -> Tax Summary -> NJ Tax Summary,

Gross income: 228684

Total exemptions and deductions: 5478

New Jersey taxable income: 223206

Total tax: 1213

Total payments and credits: 870

Balance due: 344

Tax bracket: 6.370%

Looking here, is it normal for NJ taxable income to be applied to all our wages?  We had to file CT and NY state tax as well, and they all seem to have pretty much full wages - various state deductions as AGI.  WHere can I make sure that I am not double-triple paying the state taxes, as we are full year residents of NY only?

Thanks for your help!

[BillM223 · Accepted solution]

The way this works is that these states all work on your full income as adjusted for various state additions and subtractions and then they calculate a state tax.

Please do your CT and NJ state returns first, then do your NY return. This will give TurboTax the opportunity to calculate the taxes from the nonresident states and carry these amounts to line 41 on your IT-201, which is the "Resident Credit". 

This credit is a dollar for dollar credit for taxes paid on the same income in other states. In this way states try to avoid double taxation of the same income (this works more or less well, depending on how close the states' tax rates are).

If you have already done your state returns, go to line 41 on the IT-201 and make sure that it is equal to the sum of the credits in the other two states. If no, run through all three state interviews again (CT, then NJ, then NY) to give TurboTax a chance to pick up the line 41 amount.