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diabolique · Jul 4, 2011, 10:25 AM

I've read a couple of the q&a about living in NJ and working in NY. I do understand that, once you've filed taxes after your first year of doing so, that you end up paying $0 in taxes to NJ. But is there anyway to not be double taxed DURING the time you're working in NY and not having to have double deductions DURING the year?

With the recession being what it is, jobs often not paying as much as they used to, and the commute being around $400/mo. (not including parking my car at the local train station), I'm trying to calculate how much I would need to earn to be able to accept a job in New York City, when live in NJ.

ScottGem · Jul 4, 2011, 10:48 AM

Your employer should not double withhold. They should be withholding on the basis of where you live, not where you work.

diabolique · Jul 4, 2011, 10:57 AM

I'm a bit confused then. I've read answers that I believe said that I would be paying NY taxes. I would actually be paying NJ taxes and they would either withhold one OR the other and not both at the same time awaiting for me to reconcile during tax time?

ScottGem · Jul 4, 2011, 11:28 AM

What your employer withholds and what you pay may be different things. As far as I know, employers withhold based on where you live, not where you work.

The problem I believe you face is that while NJ offers a credit for any NY State taxes owed, your withholding is still paid to the state of residence. So, you will file your non resident, NYS return, determine what you owe NYS, then take that amount as a credit against what you would owe NJ. Generally you will pay NY more, so you will get a full credit. But you will have to wait until you get your NJ refund to pay NYS.

Nadel · Jul 5, 2011, 04:04 AM

Your employer would withhold taxes and send them to NY. There would be no withholding for NJ taxes. When you file your taxes,

1) First file a non resident NY return
2) Then file a resident NJ return. You can take a tax credit for taxes paid to NY, but only on your wages. If you have interest, dividend other passive activity income, you will pay taxes to NJ.

So you won't be taxed twice, but you will pay at the higher of NY or NJ rates for your wages.

ebaines · Jul 5, 2011, 06:09 AM

Originally Posted by ScottGem

As far as I know, employers withhold based on where you live, not where you work.

Sorry Scott - not true. Employers should withhold based on where you work. Nadel has the correct answer here.

AtlantaTaxExpert · Jul 6, 2011, 08:47 AM

Agreed; the credit given by NJ will result in ZERO taxes owed. However, please remember that you must FILE a NJ tax return to claim the credit.

ScottGem · Jul 6, 2011, 08:52 AM

OK, I'm entitled to be human ;) Thanks for picking up for me.