Living in NJ, working in NY: Pay both income taxes? (credit, cost of living)
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Hey, if I live in New Jersey but work in New York, must I pay both NY and NJ state income tax?
your new york employer will be deducting new york state taxes from your paycheck, not new jersey taxes. when you file you nj resident income tax return, you will be able to take credit for the taxes paid to new york on line 39 of the return. the form you would use to figure out your credit is NJ Schedule A. You must do your Federal Return first, then your IT 203 (New York non-resident return) before you do your NJ return. the instructions on how to do the Schedule A is in the NJ tax booklet here: http://www.state.nj.us/treasury/taxa...07/071040i.pdf
the information you want is on page 33 of that booklet Schedule A is here: http://www.state.nj.us/treasury/taxa.../071040abc.pdf
Thanks. I tried to look this stuff up, but it's hard to get a straightforward answer.
EDIT: You wouldn't have any clue as to whether my income tax would generally be lower living in NJ or in NY? In other words, do the credits in NJ offset the bulk of my NY income tax bill?
Thanks. I tried to look this stuff up, but it's hard to get a straightforward answer.
You wouldn't have any clue as to whether it's generally cheaper to live in NY and pay NY taxes, or to live in NJ and have these credits, do you?
actually trying to compare cost of living in either state and and tax credits is like comparing apples and oranges. too many things encompass a "cost of living" so tax credits don't really come into play that way. from what i've read on these boards the cost of living is higher in new york than new jersey, if that information helps.
Hey, sorry, to clarify, I was wondering whether my income tax bill in particular would be higher as a NY or as a NJ resident, if I have a job in NY.
the only way you could figure that would be to check the tax rate/amount for your income in both new york and new jersey to see which state you would have a higher tax liability in. you can access the nj state tax tables at the back of the instruction booklet i gave you the link for in my prior post. you can go to ny state web site to check their tax rate for your adjusted income. again, cost of living in the two states could be very different. the income tax rate is only one consideration when figuring out cost of living.
If you live in NJ but work in New York City (not just NY state) your income tax will be lower because when you file your returns you should avoid (or recoup) the 3% income tax from the city.
Hey, sorry, to clarify, I was wondering whether my income tax bill in particular would be higher as a NY or as a NJ resident, if I have a job in NY.
If you're job is in NY, then your tax bill should be about the same no matter which state you live in. NY state taxes are typically higher than NJ, so you would get a credit that covers all of the NJ tax amount, in most instances.
So your 2 scenarios would look like this:
Live in NY: simply pay the NY tax
Live in NJ: pay NY tax, use credit to offset all NJ tax. The net is you are paying NY tax only.
After carefully reading the NJ Tax return guide, it seems that only a portion of NY Tax can be deducted as credit for NJ Tax.
Example: living in NJ, joint return, one NJ income 50K, one NY income 50K. total income 100K.
NY base tax (line 44) is 6K, total NYS Tax (line 50) is 3K (50% of 6K).
Max allowable NJ credit percentage: 50K/100K = 50%
Allowable credit for NJ Tax: 3K*50% = 1.5K
NJ Tax (based on 100K): 5K
NJ Tax after credit: 3.5K
This does not look right. 100% of 3K should be allowed as credit.
Did I miss sth? Thanks in advance!
Thanks!
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NJ Joint return for one NY income one NJ income
