New to USA and want to understand the taxes

rukmajchandavar

Hi There,

I was going through some of the discussions and they were really informative, I had couple of questions so thought who better than the community here.

I have recently moved to USA and living in New Jersey, working in New York (it is very expensive) want to understand the tax implications and what actions can I take to reduce my tax liability. Currently I am married filing separately. I am not sure about what deductions I can claim and want to be educated on the same.

I work in Information Technology services sector and even though my employer office is in New Jersey I visit customer office for everyday work. Based on this my employer has set my work location as New York and deducting New Yor based taxes. Is this valid/acceptable or should I ask them to deduct taxes based on my employer's office location?

As a resident of New Jersey do I also need to pay NJ taxes (they are not withheld as part of my salary) or since I already pay NY taxes based on my employment location will that suffice? I also found on the NJ Transit website using the public transport allows me to claim a deduction, is this applicable even if I am taking Path and MTA?

For current year(2024) I am not going to be more than 183 days in USA as I landed only in August, will I be able to claim full refund on tax? How would I be able to do this as my employer is already withholding the taxes.

I have too many questions are there any good resources which can help me navigate through income, tax and savings related financial education?

CoryF

Thank you for joining our community, Rukmajchandavar.

Welcome to the United States. I would like to start answering your questions with the Federal tax return requirement. A good source to become familiar is the IRS Publication 519 U.S. Tax Guide for Aliens. Chapter 1 allows for you to file as a nonresident or a resident for tax purposes. Based on your substantial presence test using your phrase "For current year(2024) I am not going to be more than 183 days in USA" you still have a choice. However, to reclaim the Federal taxes withheld from your paychecks, you will have to file a U.S. tax return and depend on the results for if you receive a refund or need to pay more taxes. FreeTaxUSA only supports the normal filing Form 1040. If you choose to file as a nonresident, you will need to file Form 1040NR and find another tax software to prepare your return.

Moving on to the State filing. You live and work in two of the most complicated state circumstances as far as taxing is concerned. Since you are a resident of NJ, you will need to file a NJ part-time resident return. You will need to talk to your employer whether they are able to withhold NJ taxes as well as NY taxes, if you want. Based on your W-2 (tax form sent in January 2025) State portion, it will be suggested the number to enter as NJ income by FreeTaxUSA software. If you didn't have anything withheld for NJ taxes, you will temporarily see an amount owed to NJ. Don't stop at that page. There is a Credit for Taxes Paid to another State (NY) that is a common method to remove taxes owed by NJ. You can read this article for how to claim that credit:

Based on the Credit article above, you will also file a nonresident NY return where the taxes owed, and withheld NY taxes, will be reported. This is a requirement for the Credit to apply to NJ.

The Commuting benefit requires your employer to offer this benefit for you to set aside pre-tax wages to pay for your commuting expenses, reducing your Federal Wages for income tax purposes. Please see this website.

rukmajchandavar

Thank you very much CoryF, I am glad you took so much interest and answered all my concerns. I see the document is 80+ pages, I will take time to read through and revert to this forum.