[debinnj]

My husband works in NJ for an NY corporation. We lived in NJ for all of 2009. The corporation withheld NY taxes from his W2. When I file our personal NY return to get back those taxes, how do I zero it out to get the withheld taxes back? Do I put his W2 earnings as zero even though they have been reported to NY by his employer? Also, do I report the W2 earnings to NJ since the employer failed to do so?

[MukatA]

If your husband did not work in NY, he does not have NY income. Employer should not withhold NY taxes.
Yes, file NY taxes as nonresident with 0 NY income and claim the refund. You must file NJ tax return even employer did not report it as NJ income.
With NY return, attach copy of NJ return as well a letter from employer that you were not present in NY to work; you worked in NJ. Your U.S. Tax Return: Working or Living in Two or More states

[ebaines]

Your husband needs to talk to his employer to get this corrected for 2010, so you don't have this same problem next year. They should be witholding NJ tax, NOT NY. If they continue to fail to withhold for NJ, you will be facing an interest penalty next year imposed by NJ for failing to pay taxes throughout the year.

[debinnj]

Thank you both for your help. The link from MukatA was also very helpful. I have been paying estimated taxes to NJ throughout 2009 to avoid this NJ underpayment penalty.