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I work in New York, but I live in New Jersey: what about taxes, do I need to pay in both states

'05.01.2023'

Nadezhda Verbitskaya

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Many people who work in New York live in New Jersey as rents are much lower in the neighboring state. In addition, getting to New York City from there is quick and convenient. However, in this case, questions arise regarding local taxes: should they be paid in New Jersey, New York, or both states at once (this, of course, will hit the wallet hard)? The publication knows the answer NJ Money Help.

If you live in New Jersey, the state has the right to tax your income anywhere in the world where you may have worked. If you work in New York, then he has the right to tax your income received in its territory. These two facts may lead you to think that you will have to pay regional income tax twice. But it's not. Let's find out more!

On the subject: What taxes are charged to New Yorkers

“New Jersey will allow you to deduct from your taxes in this state the amount you have already paid to another state, which eliminates double taxation,” explained Bernie Keely, a certified financial planner and accountant.

If you worked in New York, your employer gave you a W-2 form showing the wages you earned in New York and the state tax withheld from them. You must file a non-resident tax return in New York.

When filing a tax return in New Jersey, you must include wages earned in New York. Then you need to complete the NJ-COJ supplement “Deduction of taxes on income or wages paid in other jurisdictions” (Credit for Income or Wage Taxes Paid to Other Jurisdictions).

This add-on allows you to calculate how much you can deduct from New Jersey taxes against taxes in New York (or another state). This number then goes on line 43 of your New Jersey Form 1040.

If you are not sure how to proceed, it is worth hiring a tax preparer.

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