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I have a tax situation for year 2022. Amounts given below are examples.

  • 1/1/2022 to 8/8/2022: living and working in Indiana (income $55,000)
  • 8/9/2022 to 12/31/2022: living in New Jersey, working in New York (income $45,000)

  • Total income: $100,000
  • IN income: $55,000
  • NJ income: $45,000
  • NY income: $100,000 (because, New York requires all income to reported on W2)

I filed for NY non-resident tax. After standard deduction, NY will calculate tax rate based on $90,000. NY tax becomes $3000. Since I didn't earn all of income in NY, the final NY tax becomes 3000x(0.4 income factor) = $1200.

Problem

While filing for Part-year resident NJ, it asks for NY income:

  • How much of your income was double-taxed while being a resident of NJ?
  • How much NY taxes did you pay?

Questions

  • What's my double-taxed income? Is it $45,000 or $90,000 x 0.45 or something else? I am confused because NY considered Indiana income too.
  • How much NY taxes I paid to get correct NJ credits? Is it the total amount $1200 or a fraction of $1200?
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  • 1
    To clarify, you mean that the income that you were subject to New York tax on was $45,000, but the rate of New York tax was calculated based on your worldwide income ($100,000). Is that correct?
    – user102008
    Sep 30, 2023 at 3:20
  • @user102008 that is correct
    – sam
    Sep 30, 2023 at 3:35

1 Answer 1

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Your doubly-taxed income was $45,000, which is the amount of income that is taxable in both New York and New Jersey.

The amount of New York tax you paid on that doubly-taxed income was $1,200. Basically, the only income that was taxable in New York was that $45,000 of doubly-taxed income; therefore, the amount of New York tax on the doubly-taxed income is the total amount of New York tax paid, i.e. $1,200. The same is true of your New Jersey tax -- the only income that was taxable in New Jersey was that $45,000 of doubly-taxed income; therefore, the amount of New Jersey tax on the doubly-taxed income is the total amount of New Jersey tax paid. And you get a credit equal to the lesser of the two taxes.

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  • One additional complication: what if NY income is $44,500 and NJ income is $45,000? NY income is $500 less because of Cafe125 employee benefit. I think in this case, double-taxed income is $44,500. Am I correct? I didn't add this in original question for simplicity.
    – sam
    Sep 30, 2023 at 3:41
  • @sam: I believe you are correct
    – user102008
    Sep 30, 2023 at 6:48

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