NJ Resident Working in NYC - Unexpected Tax Owed to Both States in FreeTaxUSA

abhijaini
abhijaini Member Posts: 1 Newcomer
in Income

Hi Tax Experts,

I'm a New Jersey resident working in New York City, and I'm using FreeTaxUSA for the first time to file my tax returns. I've encountered an issue that I hope someone can help clarify:

Current Situation:

  • Resident of New Jersey
  • Employed in New York City
  • Using FreeTaxUSA for tax filing

Problem:
The final summary screen in FreeTaxUSA shows that I owe taxes to both New Jersey and New York. However, my understanding is that I should typically receive a refund from New York, which could then be applied to my New Jersey tax liability.

Questions:

  1. Is it normal to see tax owed to both states in this situation, or is this likely an error in my filing?
  2. How can I verify if I've correctly input my information for the NY-NJ tax credit?
  3. Are there specific steps in FreeTaxUSA I should review to ensure proper allocation of taxes between the two states?
  4. If this is an error, what's the best way to correct it within the FreeTaxUSA software?

Any guidance or tips would be greatly appreciated. I want to ensure I'm filing correctly and not overpaying taxes to either state.

Thank you in advance for your help!

Answers

  • KeriC
    KeriC FreeTaxUSA Agent Posts: 186

    Hello abhijaini,

    As a resident of NJ, they will tax you on all of your income. If you work in NYC, NY will tax on on your income earned from NY sources.

    To remedy being double-taxed on your NY source wages, you are able to take a credit for taxes paid to NY on your NJ return. Do you know if you had added this credit to your NJ return yet?

    There are a lot of factors that determine if you receive refunds from either state, so it's impossible for me to know from here. However, if you log into your account and contact Support, they can most definitely take a look at your specific return.

    The basic steps for claiming the credit for taxes paid to another state can be found in this article: 

    https://community.freetaxusa.com/kb/articles/72-how-to-claim-the-credit-for-taxes-paid-to-another-state

     If you encounter any difficulties as you enter your information to have this credit calculate, please reach out to Support from within your account and they will be happy to assist you further.

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