If I live in New York and work in NJ, Do I have to pay tax both in NJ and NY?

Question

How does this work? I know certain states don't have state tax but If I work at a state with no state tax but live in a state that does, do I have to pay state taxes?

Answer 1

File a NJ Non-Resident return lising ONLY the income earned in NJ and pay any tax due. Then file a NY Resident return listing all income from all sources. You will get a credit on your NY return for the NJ taxes paid (not "depending upon which tax was withheld" as another poster stated).

You aren't taxed twice but the net effect is that you will pay state tax at the higher of the 2 states' rates.

Some states have reciprocity agreements that normally stipulate that residents are only taxed in their home state. NJ & PA have such an agreement. NY and NJ do not, at least the last time I checked.

Answer 2

I used to work in NJ and live in NY. I had to pay both taxes (filed forms with both), but one state CREDITS the other (depending on which you are having deducted from you pay) and you should not pay more taxes that you would if you worked and lived in the same state.

Not sure, but I would think if you worked in a state with no taxes, but lived in a state that had income tax, you would still need to pay your state's tax...after all, you are using their state services just by living there. (But if you are talking about NJ & NY, this example does not work because they both sure tax you!!)

Answer 3

States with no income tax withholding on wages:

Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming

If you are a permanent resident of one of the states above, but you work in one of the other 41 states, then you almost always will have the other state's income tax withheld from your paycheck. Then again, you may be able to file a non-resident tax return for that state and get some of it back. Depends on the state.