Hi all,

I live in Queens, NY, and my office is in NJ.
When I do my taxes I have to do NY and NJ because of this.
I have been offered to transfer to a NYC based office in Manhattan. I already work out of that office but I am not officially assigned there.
I am told it might be beneficial because then I would not have to do NJ taxes, only NYC, but would this give me a bigger return?
Any ideas?
Thank you,

It won't give you a bigger return, as you will still be saddled with both NY State and NY City resident taxes. The taxes you've been paying to NJ have been offset by a credit from NY State - if you no longer pay taxes to NJ you won't have that credit any more. So it's a wash from a tax standpoint. Working out of Manhattan will cut down on your paperwork, however, and the shorter commute may be more atractive to you.

If you want to save on income taxes, you should move to NJ and work in NJ.

If you do not live in NJ and do not work in NJ, then you do not pay NJ taxes.
If you work in NJ and live in NY, then on income in NJ you must pay taxes. In NY you report your world wide income. You will get credit for taxes paid to NJ.
Read Your U.S. Tax Return: Working or Living in Two or More states

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Originally Posted by ebaines

It won't give you a bigger return, as you will still be saddled with both NY State and NY City resident taxes. The taxes you've been paying to NJ have been offset by a credit from NY State - if you no longer pay taxes to NJ you won't have that credit any more. So it's a wash from a tax standpoint. Working out of Manhattan will cut down on your paperwork, however, and the shorter commute may be more atractive to you.

If you want to save on income taxes, you should move to NJ and work in NJ.

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I really appreciate your help with this.
I have a question as a follow-up on your response, though.
You say if I am officially transferred I would have to pay both NY State and NY City taxes. Right now I live in Queens (which is one of the five boroughs of NYC), so I guess I already pay State and City taxes even without working in Manhattan?
Forgive my utter ignorance on taxes! :o
Thank you!

That is correct.

You are liable for NY state taxes for income earned WITHIN NY state regardless of where you live.

You are also liable for state taxes in the state where you live (in your case, NJ) for the income earned in NY state. However, the credit offered by NJ for the state taxes paid to NY WILL completely offset any money owed to NJ. In effect, when you file the NJ tax return, you owe nothing and, if no NJ income taxes wre withheld, you get nothikng back. However, you STILL have to file the NJ tax return.

If you live in NYC (in your case, Queens), you are also liable for NYC income taxes, which can be about 1-3% of your salary.

So if you live in NJ and work in NY, essentially you will pay ONLY NY state income taxes. YOU have to decide if the hassle of comutting from NJ to NY and back everyday is worth the monetary savings of NOT paying NY city income taxes.

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Originally Posted by AtlantaTaxExpert

So if you live in NJ and work in NY, essentially you will pay ONLY NY state income taxes. YOU have to decide if the hassle of comutting from NJ to NY and back everyday is worth the monetary savings of NOT paying NY city income taxes.

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Wow! ThTanks so much for such detailed response!
Well, the commute is not a problem. I still use the Manhattan office so my commute is fine today. The administrator just asked if I wanted to 'officially' be assigned to the Manhattan office instead of Jersey, but I still can use both. So the only real reason for me to do this would be because it would benefit me with the taxes. But based on your response and previous responses it appears that this wouldn't be a smart move on my part, right?

Thanks!

Quote:

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Originally Posted by narada108

I really appreciate your help with this.
Right now I live in Queens (which is one of the five boroughs of NYC), so I guess I already pay State and City taxes even without working in Manhattan?

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Yes - if you look at your 2007 NY State income tax form, line 58 of 2007 IT-201 should be where your NY City resident tax is shown. It gets added to your NY State tax to determine your total tax bill.

You would avoid this extra tax if you lived outside of NYC (or Yonkers) and commuted to your job in Manhattan.

Because of where you live (in Queens) and where you work (in NJ), you must PAY taxes to NYC, NJ state and NY state.

The NJ state taxes paid are offset by the credit NY state gives for the taxes paid to NJ, so that is essentially a wash.

If you are going to continue to live in Queens, you might as well work in NY state and, after 2008, avoid the hassle to having to file NJ state tax return.

The amount taxes paid will NOT change; you just have one LESS tax return to file.

Quote:

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Originally Posted by narada108

Wow! thTanks so much for such detailed response!
Well, the commute is not a problem. I still use the Manhattan office so my commute is fine today. The administrator just asked if I wanted to 'officially' be assigned to the Manhattan office instead of Jersey, but I still can use both. So the only real reason for me to do this would be because it would benefit me with the taxes. But based on your response and previous responses it appears that this wouldn't be a smart move on my part, right?

Thanks!

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As we've stated before - there will be absolutely no change in your taxes if you make the change. There will be a decrease in paperwork and hassle for you, however, as you will no longer have to bother filing taxes with NJ. If it was me, I would agree to be assigned to the Manhattan office for that reason alone.