My stock option was granted to me when I worked in MA, transferred to the same company in NJ later. Moved back to MA in 2006 and work for a different company, exercised my stock option in the beginning of 2007. NJ tax was deducted from the W-2 form from my previous company. Do I have to pay this tax as non resident in NJ? If not, how can I get it back? Thanks in advance

"Exercised stock options" means you have purchased the stocks. It is your investment. You will report it only when you sell it and have a profit or loss.

First, I assume that these were "non-qualified stock options" (NQSO) - which is the most common for regular employees. Please advise if otherwise.

Since you live in MA you do not owe NJ income tax on the difference between the market and strike prices when you exercised the stock option in 2007. You should include this as income on your MA tax return (since you were an MA resident when you received the proceeds). Since your former employer withheld NJ tax, you will have to file an NJ-1040NR non-resident tax return for 2007 to get a refund from them. Just to be clear - for 2007 the only income shown on the W2 from your former company was the income from the stock option, correct? Also, did you receive a 1099 form regarding the exercise of this option?

Thanks for the help. :)

Yes, the only income shown on the W2 from your former company in 2007 was the income from the stock option but I did not receive a 1099 form regarding the exercise of this option.

If you still have the stocks, you don't report any stock sales income.
You will report your W2 income.

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Originally Posted by jas1107

Thanks for the help. :)

Yes, the only income shown on the W2 from your former company in 2007 was the income from the stock option but I did not receive a 1099 form regarding the exercise of this option.

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OK then - include this as income on your federal and MA tax forms along with your other W2 income. You'll have to file a NJ-1040NR to get your refund.