I work in NY and live in NJ, do I have to pay NJ tax on NY income?

Robbie · #1 (**permalink**) 03-12-2007, 09:35 AM

I have to file NY and NJ tax, I do get it, I have to pay taxes in NY and NJ.

My turbotax program is taking all my income earned from NY and combining income with my spouse who is a NJ employee on the NJ tax return! That means I am paying double tax on same NY income! This doesnt make sense to me.

Am I missing something????

TaxGuru · #2 (**permalink**) 03-14-2007, 09:23 AM

Dear Robbie,

No you are not paying double tax at all! The NJ return is taking your combined income and providing you with a Tax credit on Sch ABC of the NJ tax return. Your turbo tax is performing a very complicated tax calculation but here is the summary of what it is attempting to calculate;

The percentage of NY income
-------------------------------- x Total taxes paid in NY = NJ tax credit allowed
The total income (NJ +NY)

This credit is offset against the NJ tax on the entire income. In this manner you dont pay tax twice. Recheck your program and look at the NJ Sch ABC carfully and you will see the above calculation performed.

confusedwtaxes · #3 (**permalink**) 03-05-2009, 12:00 PM

I have a similar problem. It seems like when calculating the total income though, turbo tax is using my spouses income as well as mine for the denominator so I'm only getting about 60% credit of my NY taxes paid towards NJ where I live. It this correct? Would my spouse and I be better off filing separately then so I get the full 100% credit?