Hi,
Currently I work in NJ and rent in NYC, while my wife works in NY. I have been having NY, NYC and NJ tax withheld from my paycheck. I was thinking of buying or renting a small place in NJ and was wondering how it would affect the tax situation.
1) If I buy or rent in NJ, while continuing to maintain my current living in NYC can I only pay NJ taxes, while my wife pays NY taxes?
2)Would it be beneficial to show NJ as place of residency rather than NYC as being done currently.
3) How would having two places of residency affect the taxes being paid?
4) If my wife moved her job to NJ, so that now both of us are working in NJ and have a place of residency there, and we continue keeping our place in NY do we still have to pay tax for both places or just NJ? ie. this scenario all income is NJ based.
5)Is there any way to pay just NJ taxes, while maintaining some sort of living quarters in NYC?
Or am i screwed in having to pay for both?
My income is higher than my wifes...if it matters. Would this be a situation where married filing separate returns can be advantageous?
Thanks.

1) No. Your residence with your wife is considered your PRIMARY residence for tax purposes.

2) Maybe. NJ has a lower tax rate. You should be getting a tax credit from NY state for the taxes you currently pay to NJ.

3) It will not affect your current tax situation, as NY will not recognize that you have established residence in NJ as long as you continue to maintain a residence in NYC.

4) Maintaining your residence in NYC gives NYC and NY state the excuse to say that your primary residence is in NYC, making you liable for NYC and NY state income taxes.

5) No, not IMHO. The NY tax authorities specifically ask if you maintain living quarters in NY and will use your answer to maintain their position that you are in fact a NY state resident.

Filing separately MAY help you. The only way to know for sure is to prepare the return BOTH ways and compare the results.

Thanks for the answers, you totally rock the tax boards!

Glad to help!