Hi,

This is the first time I will be filing for taxes and I have three states involved. I was hoping I could list my situation and someone could tell me what forms I need and what to do.

January 05-June 05: Having graduated college in PA in 12/04, I remained in my college town and worked a retail job.

June 05-Dec 05: Moved to New Jersey, but worked in NYC for the remainder of the year.

I also have been paying off PA student loans, which I received a statement of paid interest in the mail the other day.

I think I have a handle on Federal income tax, as I just list everything, but I'm not sure how to correctly separate PA/NY/NJ income (who needs to know what) and what forms for each state to file. My job in NYC has been withholding for NY state tax.

Any help would be appreciated,

Thanks!

-Jack

Jack:

You would file a part-year resident tax return for PA and NJ and a non-resident tax return for NY state.

Since you do not live in NY city, you owe zero NYC tax.

You pay state income tax to Pennsylvania on the income you earned in PA.

Since you earned the income in NY, NY state has first call on your NY-based income, which is why NY state taxes were withheld from your pay.

Since you live in New Jersey, NJ also taxes your NY-based income, but they give you a credit for the NY taxes you pay. Since NY's tax rates are higher than NJ, the NY taxes almost always exceed the NJ taxes and you owe zero NJ taxes. That's why no NJ taxes were withheld from yor salary.

You still need to file a NJ tax return, however, and, due to a renter's rebate or property tax credit, you will probably get a small (about $50) refund, even though no NJ taxes were withheld from your pay.

The PA student loan interest is deductible from your federal income tax return (provided your 2005 income was not too high), and is probably also deductible from your NY state income tax return.

You can get the needed tax forms from the PA, NJ and NY government website. If, however, you do not want to deal with it, I am available to prepare you tax return for the IRS and all three states. Contact me at [email protected] if you are interested.

Wow, that's great thanks.

One more question for you: this 'tax credit' between states, is there an additional form I have to send in for that so each state knows to do it, or is it something they communicate amongst themselves, and I just fill out the regular returns.

And to recap:

PA: Fill out regular return form with PA wage info
NY: Fill out regular return form with NY wage info, saying non-resident
NJ: Fill out regular return, as partial year resident, with NY wage info, and then they'll just know not to charge me...

And then good old federal.

Just making sure I'm not missing anything. Thanks.

Jack:

I will answer your question via e-mail.