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Filing Taxes in Two States: Working in NY & Living in NJ

how to file taxes in two states

If you’re living and working in different states, plan on filing taxes in two states.

For many,  working and living in different states can save you a lot of money. This is especially true if you work in an expensive city like New York City .

The commute from New Jersey to the Big Apple may be much more attractive to you, especially if you’re looking for more space, lower costs and fewer people.

However, you’ll want to keep in mind that those who work and live in different states are required to file taxes in both states.

In other words, you’ll need to file both a New Jersey and New York state tax return.

File a Non-Resident NY State Tax Return & a Resident NJ State Return

If you’re working in a different state than you live in, you’re required to;

  • file a non-resident state return to the state you work in
  • file a resident state return to the state you live in
  • file a federal tax return

With that said, if you’re working in New York and living in New Jersey, you’ll need to file two state tax returns- a non-resident return to NY and a resident return to NJ.

As part of the working out of state tax rules, when filing a non-resident tax return you’re only required report (and be taxed on) the income you earned in the non-resident state.

However, when filing a resident tax return, you’ll need to report all income from all state sources. That means, if you’re a resident of New Jersey and working in New York, you’ll need to report any income received during the tax year on your New Jersey tax return, regardless of what state it came from. As a resident, you’ll also be taxed on this amount.

Double Taxation

Filing taxes in two states is aggravating enough.  If you’re paying taxes in two states and face double taxation, it’s even worse.  However, you’ll be happy to

hear there is a state credit for the taxes you paid twice.

If you plan it out correctly when filling out your W-4 form (where you report your number of allowances), and claim a low number of allowances, then when it comes time to file your non-resident NY state tax return, you’ll probably end up receiving a New York State refund. Then, you can use that refund to pay your New Jersey taxes.

If You Work in New York City

If you commute from NJ to NYC for work, you should keep in mind that as a non-resident of New York, you won’t be required to pay the city tax.

In other words, it’s important that your employer knows you’re not a resident of the city so that additional taxes are not being withheld from your paychecks.

It’s also good to keep in mind that New York tax rates are higher than New Jersey tax rates.  In other words, if you’re thinking of moving closer to your job, you may want to think twice about it. Moving from New Jersey to New York City means you’ll not only face a city tax, you’ll also end up paying higher tax rates.

Avoid Frustrations of Filing Multiple Returns & Use PriorTax

Filing multiple state tax returns can seem overwhelming. However, selecting a tax preparation service like PriorTax. will save you aggravation. You’ll get your multiple state tax returns done within minutes!

If you still need to file your 2013 tax return, you’ll want to do it before the 2014 tax season deadline, October 15th. After this day, you’ll end up facing late penalities and won’t be able to e-file.

Why wait any longer? Get your tax return(s) done today with PriorTax! We’re here to help.

This entry was posted on Friday, October 10th, 2014 at 4:57 pm and is filed under Late Taxes. Tax Tips. Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response. or trackback from your own site.

Category: Taxes

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