[JLater]

Hi,
I am wondering about the tax implications of a planned move. I will certainly move to NYC, though where I work remains up in the air. Tax status is single.

I currently live and work in NJ, however, I am contemplating moving to NYC while keeping my job in NJ.

I realize I would probably need to pay NYC taxes, but what about state taxes?

On the other hand, I could move to NYC and get a job there (somewhat higher salary) as well. Is that a better plan?

Thanks in advance!!

[AtlantaTaxExpert]

JLater:

General rule:

If you work in one state and live in another, both states will tax your income, but the live-in state will normally give you a credit for the taxes paid in the work state.

If you live in NJ and work in NYC: NY state taxes are higher than NJ, so payment of the NY state taxes will usually offset any NJ taxes owed. In this case, have only NY state taxes withheld from your pay. As for NY City taxes, they are NOT due unless you live in NYC.

If you live in NYC and work in NJ, the offset will not be total and you will probably owe some taxes to NY state, but it will not be too much. To be sure, you should have both NJ and NY taxes withheld from your paycheck.

[harpbynina]

I am in the situation today: I live in NYC and work in NJ (new job). I notice you say to have taxes withheld in both states.

If I can calculate the difference in State tax rates, wouldn't it be better to either have the difference withheld to NY state or just pay quarterly the difference? Otherwise, the entire NY state tax rate will be withheld and paid to NY state and I will just get a refund of that money (minus the difference) at tax time.

Thanks for your help.

[AtlantaTaxExpert]

Harpbynina:

NJ will probably NOT give you the option of withholding only for NY state/NYC. They want to be sure to get their taxes before you have a chnace to spend it and to keep you from conveniently "forgetting" to file a NJ tax return.

Other than that minor detail, the states normally do not care how you pay the taxes, just as long as you do pay in a timely manner.

[harpbynina]

Sorry:

I wasn't suggesting I "forget" about the other state. I now have a couple of pay stubs. Money is being taken out for both states, the larger amount is taken out by NJ. The smaller amount for NY (about 10% of what the NJ figure is). So I assume it is close to being correct.

Thanks for your advice.

[AtlantaTaxExpert]

Harpbynina:

I did not mean to imply that you were attempting to evade your state income tax liability. The fact that you are addressing this issue on this forum clearly shows that you are addressing this issue.