Hundreds of thousands of people live in NJ and work in NY. NJ and NY do not have a reciprocal tax agreement.
The Basic Rule
You file a NY non-resident return reporting NY-source income and paying NY tax. You file a NJ resident return reporting all income. NJ gives you a credit for taxes paid to NY.
Remote Work Complications
NY’s convenience of the employer rule means if you work remotely from NJ for a NY employer as a convenience, NY may still tax that income.
NYC Income Tax
If you work in NYC but live in NJ, you do not pay NYC income tax. It only applies to NYC residents.
Common Mistakes
Forgetting the NY non-resident return, claiming the NJ credit incorrectly, not accounting for the convenience rule, and mixing up estimated payment allocations.
Disclaimer: The information provided is for general educational purposes only and does not constitute tax, legal, or investment advice. This content is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Tax outcomes depend on your specific facts and circumstances. Viewing this material does not create a CPA-client relationship. Personalized advice is provided only through a signed engagement letter.
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