Hi:

My employer is NJ based, but I am residing in NY from Jan '06 working for a client here. I will most probably reside in NY until the end of this year.

For 2006

1. My income source is only NJ (My employer is holding NJ taxes from my pay checks)
2. All year I have resided in NY

Should I file for both state taxes or just one (Which One.. ).. If I file for both states would I get tax credit from one of the states..?

I would really appreciate if some one can answer my questions.

Thanks,
Rapid

Assuming to reside in NY on a full-time basis, you must file tax returns with both NJ and NY.

If you work and live in NY permanently, you need pay NY state taxes ONLY. The fact that your company is located in NJ is irrelevant. You should file a NJ tax return to recover all the withheld taxes.

If you work in NY, but will live there temporarily (less than a year), then you have not established residency in NY and must file tax returns for both states. You will pay taxes to NY state first, but NJ will give you a credit that will completely offset whatever you owe to NJ. In fact, you will get a small refund ($50) as a rental or real estate tax rebate.

Thank you Atlanta Tax Expert. I am still a little bit confused about this.

I work as a consultant for company in NJ and I have no clue if I will stay in NY or any state for that matter PERMANENTLY. As far as this year is concerned from Jan 17th 2006 to Dec 31 2006 I am/will be in NY. After Dec 31 2006, I might/might not stay in NY. If I stay I am not sure how long that's going to be. It all depends on the clients of the compnay that I work for.

Given this scenario... AM I correct that I need to pay NY taxes first and file with NJ for a refund..? As I haven't established residency in NY during this tax period (Jan 1st 2006 to Dec 31 2006). I lived in NY from Jan 17th so that's less than a year.

You said "If you work and live in NY permanently, you need pay NY state taxes ONLY." What does living in NY permanently entails. I don't own a house in NY

And what does living in NY on a full time basis mean. Is this different from permanently living in NY..?

Appreciate your help

Thanks,
Rapid

Rapid:

If you rent an apartment and sign a lease for a year, or live in one location (even if that location is a hotel for over a year), then IRS no longer considers your move to be a temporary work assignment, but rather a permanent location change unless you maintain a home/apartment in your former location and return there periodically.

So, if you work in NY and rent an apartment in NY and have nothing back in NJ that maintains your residency in that state, then you can file as a NY resident. The fact that you lived there for slightly less than one year will not make any difference.

Thanks Atalanta Expert:

Another qucik question: I have 14k as per day expenses. I won't have to pay taxes (or even declare) at all for this 14k. Is that right.. Please let me know.

Can you do tax filing for me for next year. Where are you located... I am assuming that you are in Atlanta. Do u do NY / NJ taxes at all..

To recap I will file as NY resident first and then file with NJ for refund of all the taxes withheld. I will get all the withheld money back + a small refund ($50) as a rental or real estate tax rebate.

Thanks,
Rapid

Rapid:

If you are getting $14K in per diem and you are filing expense reports with your employer, then the employer's plan is a "accountable" plan and the per diem is NOT taxable.

Yes, I can file your return for you. I am located in Atlanta, but I have a number of client in NYC and New Jersey who have used my services for several years whom I have never met! Contact me at [email protected] and I will give you their e-mail address so you can check my references.

I will also give you an idea as to what my fee would be.