1) I made a $10,000 in NJ for a project last year while I am an CA resident,
What is supposed the income be reported by the NJ employer in my W2:
Shall be $10,000 in both NJ and CA or, shall be in $10,000 but $0 in my CA, or what?
2) and if the employer somehow made a mistake in reporting to my W2 where I can escalated the mistake.

It should be $10000 NJ and $0 CA. Even there is a mistake on W-2, it does not change how you must file your tax return.

Report NJ income to NJ and pay the taxes.
Report worldwide income including NJ income to CA. Claim credit for taxes paid to CA. Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)

It should be $10000 NJ and $0 CA. Even there is a mistake on W-2, it does not change how you must file your tax return.

Report NJ income to NJ and pay the taxes.
Report worldwide income including NJ income to CA. Claim credit for taxes paid to CA. Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)

Hi MukatA,

Thanks for your post. It is very helpful here.
If I need your professional service, can you provide your office contact?

Thanks,
David

For professional services, you should contact AtlantaTaxExpert at [email protected].