I work in DE but live in NJ, do I file my taxes in DE or NJ or both?

Question

I would like to pick the option that doesnt require me to pay the taxes at the end. Do you normally pay more taxes in DE than in NJ and then recieve the credir from NJ.. how do i go about that?

Answer 1

You don't have an option. If you work in Delaware you have to file a Delaware tax return, non-resident in your case, and pay income tax to Delaware. Hopefully your employer is withholding Delaware taxes from your paycheck. You will also file a New Jersey resident tax return, and report your W-2 wages on that return. New Jersey will give you a credit for the taxes paid to Delaware, but it won't be $ for $. It will be either the tax liability to Delaware of what the tax liability to New Jersey on that income is, whichever is lower.

Answer 2

Since you live in NJ, you will ALWAYS pay income tax in NJ.

NJ does not apear to have a reciprocity agreement with DE so you will have to file a non-resident return in DE listing only the DE sourced income and pay any tax due. You'll then file a NJ resident return listing all income from all sources world-wide. NJ will allow you a credit against your NJ tax liability for the DE income taxes paid. You claim that credit by filing Schedule A with your NJ tax return.

This has the net effect of levying income tax on the DE income at the higher of the 2 states' tax rates. There's no way to avoid this and you don't get to pick and choose how you file.

See the link below for further information.

Answer 3

You file DE first then NJ. NJ probably has a CR form that tells NJ you had file taxes in DE. A CR form is a Credit Tax Form. I am sure your local tax advisor can tell you all about this.

Answer 4

You would have to file in both states. Your best bet would be to consult a tax professional, as it can be difficult dealing with two states.

Answer 5

You file taxes where you live.