Comments on: How can I be forced to pay income tax to two states?

Question: How can I be forced to pay income tax to two states?

zembla3 — Sun, 30 Apr 2006 10:55:48 -0800

I live in New York and recently started a new job in New Jersey. On my first pay stub, I noticed that I'm paying a state income tax for both NY and NJ (and the tax for new jersey is actually $30 more than the NY tax). How can I be forced to pay income tax to two different states when I only live in one? This seems unjust.

By: sbutler

sbutler — Sun, 30 Apr 2006 10:59:08 -0800

There is some relevant information in this thread. Basically, it looks like NY and NJ have a special arrangement because of the large number of people who commute.

By: zembla3

zembla3 — Sun, 30 Apr 2006 11:25:41 -0800

Yeah, I saw that thread but I found it sort of confusing. Does this mean I'll get a refund at the end of the year for what I'm paying in NJ income taxes?

By: ikkyu2

ikkyu2 — Sun, 30 Apr 2006 11:31:13 -0800

You're not "paying" any income tax. New York and New Jersey are both receiving monies that are being withheld from your paycheck by your employer, but they don't own that money yet. It's still your money.

Come tax time next year, you'll have to fill out a Resident New York State Tax return (IT-203, if memory doesn't fail me), and also a non-resident New Jersey return (I can't remember what this one is called.)

If you carefully scrutinize these things, you'll find that New York and New Jersey more or less split your state taxes - you get a hefty deduction on each return that is calculated by an estimate of what you're going to be paying to the other state. So you wind up not double paying; in my experience the tax hit was generally slightly less than it otherwise would've been (except for NY city income tax, which you get slammed with no matter what you do.)

By: naxosaxur

naxosaxur — Sun, 30 Apr 2006 12:51:16 -0800

i did the same double-taxation for 6 years, but the exact opposite...living in NJ and working in NYC.

Every year, you'll have to fill out your federal income form (to the IRS), a NJ state nonresident income tax return (to the state of NJ division of taxation), and a NY income tax return (to the NY state processing center). For this reason, I'm more comfortable using an accountant who takes care of this mess for me every year.

But it's true...the cool thing is that you'll (hopefully) get back some money from both NJ and NY at tax time.

By: oaf

oaf — Sun, 30 Apr 2006 17:42:26 -0800

The New Jersey non-resident return is the 1040-NR.