I live in Hudson County, New Jersey, but work in Manhattan. About 5% of my paycheck is deducted for state taxes. Will I get any of this back? What will I have to pay for New Jersey state taxes? I know a lot of people commute like this so if anyone that can explain the tax situation please help!! Thanks.
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You will have to report all of your income on a NJ resident return. You will report the NY sourced part of you wage on a NY Non resident return. You will compute a tax credit on your NJ return for the tax paid to NY. However, since NY has a higher tax rate on income, the credit will be limited to the amount computed by using the NJ rate. IN all likelihood, you will not owe any Nj tax on the NY part of your wages. I don't know what state taxes they are deducting but I will guess it is NY. If that is the case, you probably will breakeven on your NJ return if all of your wages earned were from the NY job. This can get complicated. You should have a tax pereparer do the work this year due to the multi state issues involved.
