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How do I calculate the other state tax credit as a New York resident who works in New Jersey?

SOLVEDby TurboTax44Updated February 07, 2022

If you’re a New York resident and work in New Jersey, you’ll need to file a New York resident return and a New Jersey nonresident return.

New York requires you to pay tax on all of your income, regardless of where it is earned. In addition, New Jersey collects taxes on the income you earned while working in their state. This income won’t be double-taxed because New York gives you a tax credit for taxes paid to other jurisdictions.

To ensure accurate calculations of the credit on your New York return, always complete the nonresident New Jersey return first.

Follow these instructions to compute the other state tax credit for New York:

  1. Open or continue your return
  2. Select State from the left menu, then select Start next to your nonresident New Jersey return
  3. Answer the interview questions and allocate your wages earned in New Jersey
    1. On the Did you earn all of your wages in New Jersey screen, answer Yes if all of your wages were earned in New Jersey, or answer No if only some of your wages were earned in New Jersey
    2. Answering No opens a box where you can enter your NJ wages. Or, you can select Split Wages by Days
  4. Continue through the interview questions until you reach the Your New Jersey Bottom Line (NJ-1040NR) screen
    1. Take note of the Total Taxable Income amount, as well as the Net Tax After Nonresident Adjustment amount
  5. Select State from the left menu, and start your New York resident return
  6. Continue until you reach the Take a Look at New York Credits and Taxes screen. Go to the Credit for Taxes Paid section and select  Start next to Taxes Paid to Another State
  7. Click Edit next to New Jersey on the Other State Tax Credit Summary screen
  8. If the Portion Taxed by New Jersey is correct, click Continue
    1. If the Portion Taxed by New Jersey is not correct, enter the correct amount in the box under Amount if Different
  9. If the New Jersey Tax is correct, click Continue
    1. If the New Jersey Tax is not correct, enter the correct amount in the box under Amount if Different
  10. On the following screen, we’ll let you know your credit amount for tax paid to New Jersey

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