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Please help this NJ resident with a state tax question. I live, own property, am employed and vote in NJ. In 2014 I traveled to & worked in DC about 70 business days, always staying in hotels. My employer withheld tax for both states proportionately as far as I can tell, NJ tax for the work days I was not traveling and DC tax for the work days I was there.

I've filed DC tax form D-40B, nonresident request for refund. Based on the facts that I was non-resident and present fewer than 183 days, I think the form tells me I will get a full refund of the DC tax paid. But the form also says "we may determine that you qualify as a DC resident", and I don't have that answer yet.

The HR Block state tax program for NJ seems to indicate I can take a credit on my 2014 NJ return for tax paid to DC. HR Block doesn't provide a state program for non-resident DC tax filing, so I can't lean on it for help here.

NJ and DC do not have a reciprocal tax agreement, says my payroll department as justification for withholding both taxes.

So .. I may get all the DC withholding back in 2015, I firmly believe that NJ will want more tax, and I don't want to pay a penalty!

The main question I'm trying to ask: when does this all shake out? When I file a tax return for 2015? And is a penalty unavoidable?

My question is very close to this SE-money post, altho that one doesn't address the reconciliation question:

Which state do you pay taxes in if you work in a different state than your employer? Specifically, if you live DC and work for a company in New York?

Thanks in advance.

Update: tried to clarify per Andy's comment.

  • If you had NJ tax withheld from your time in DC already, I don't see how NJ could tax you again on it. They calculate tax based on your gross adjusted income, not whether you're paying tax to someone else I'd think. – Andy Feb 15 '15 at 19:05
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If you already filed the DC return, you can try and wait with filing the NJ return until you get the answer from DC. You can file an extension request with the NJ division of taxation here. Or, you can file without claiming the credit, and worst case amend later and claim it if DC refuse to refund.

I find it highly unlikely that DC will decide that a person staying for a couple of months over the year in hotels will count as a resident.

  • Yeah I've decided against claiming tax credit in NJ for the DC tax. I will file DC now to get refund, wait for an answer, and hopefully file NJ long before the deadline (thx for link). Accepting yr answer now even tho I won't know the true answer for a very long time :) – chrisinmtown Feb 15 '15 at 23:03

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