Tax benefit of living in NJ vs. living in boroughs and working in Manhattan (New York: renter)

[skinsgirl]

Hi All-

I expect to be taking a job in Manhattan in the next few weeks, and I had a few questions. Is there a tax benefit to living in NJ instead of NYC? Do residents of NJ still have to pay NYC income tax?

Of course, on my meager entry level salary (~35k) it may add up to peanuts, but better to be informed about my options than not.

[Fred314X]

If you live in New Jersey but work in New York, you'll wind up paying a nonresident tax to New York. And that comes at a higher rate than the resident taxes paid by New Yorkers.

[openheads]

^^^^ But you get a tax credit from NJ.

[davisdartman]

As far as I understand, you only pay the city tax if you live in one of the boroughs. So if you live on Long Island or in New Jersey, you don't have to pay that. They make up for it with higher property taxes in those areas.

[holden125]

Originally Posted by davisdartman

As far as I understand, you only pay the city tax if you live in one of the boroughs. So if you live on Long Island or in New Jersey, you don't have to pay that. They make up for it with higher property taxes in those areas.

This is true. They eliminated the NYC "commuter tax" a few years ago. It used to be that anyone who worked in NYC had to pay NYC income tax. Now, if you live outside the 5 boros you don't.

The property taxes are higher outside the city but that would not affect you directly if you a renter (only indirectly in the form of higher rents passed on by landlords). But rents there are generally lower in Hoboken and Jersey City than in Manhattan and the parts of the outer boros closer to it anyway.

At $35K, living in NJ would save you about $77 a month in NYC income tax you won't have to pay. But you might give it right back if you need the PATH and the subway to get to work, since you'd have to pay for each separately-no free transfer. And it can be a royal pain to get back to NJ later in the evening or on the weekend. I'm not a huge PATH fan. You'll almost certainly spend more than $77 a month if you rely on NJ Transit and still have to take the subway from Penn Station to get to work.

At $35K I wouldn't worry all that much about the NYC income tax, and certainly not if you don't work near a PATH station in NYC.

[skinsgirl]

Thanks for the advice. I didn't think it would make a huge difference once PATH and the subway charges were factored in. Queens it is!