Q&A: Do I Have to Pay NY Taxes if I Live in NJ and Work in NYC? - Answered!

 Are you a New Jersey resident working in New York City? With tax season approaching, it’s crucial to understand your tax obligations in both states to avoid surprises come April. Filing taxes in two states can be complex, but don’t worry – we’ve got you covered! In this blog post, we break down everything you need to know about filing taxes in New Jersey and New York for 2025, so you can stay compliant and maximize your savings.

👉 Watch the full breakdown here: https://youtu.be/cHA3S4c-lwQ

1. Understanding New York’s Non-Resident Income Taxes

As a New Jersey resident working in New York City, you will likely be subject to New York state income tax on the income you earn within the state. New York taxes non-residents on income earned from work performed in the state. This means that even though you live in New Jersey, your earnings from a job in New York City will be taxed by New York.

However, New York provides a tax credit for residents of other states who work in New York. This credit helps reduce the risk of paying double taxes on the same income.

Key Points to Remember:

  • You’ll file a New York State Non-Resident Income Tax Return (Form IT-203).

  • Only income earned from work performed in New York is taxable by the state of New York.

2. New Jersey Resident Income Taxes

As a resident of New Jersey, you’re required to report all income – including income earned in New York – on your New Jersey tax return. This means that even though you pay taxes to New York, you still need to file a New Jersey Resident Income Tax Return.

The good news is that New Jersey offers a credit for taxes paid to other states, which can offset the amount you owe to New Jersey for the income earned in New York. Essentially, this credit helps ensure you’re not paying state taxes twice on the same earnings.

Key Points to Remember:

  • You’ll file a New Jersey Resident Income Tax Return (Form NJ-1040).

  • The credit for taxes paid to other states can reduce your New Jersey tax liability.

  • Make sure to maintain thorough records of your income earned and taxes paid to New York.

3. Avoiding Double Taxation with Tax Credits

One of the biggest concerns for New Jersey residents working in New York is the possibility of double taxation. Fortunately, both states have provisions to prevent this.

  • New York’s Non-Resident Credit: When filing in New York, you’ll pay taxes on the income earned in New York. To avoid double taxation, New Jersey will give you a credit for the taxes you paid to New York, reducing your overall tax burden.

  • New Jersey’s Credit for Taxes Paid to Other States: This allows you to claim a credit for the income taxes paid to New York. The credit can be used to offset your New Jersey tax liability, ensuring that you’re not taxed twice on the same income.

Pro Tip: The credits may not always fully eliminate your tax liability. Depending on your specific situation (like your income level and the amount of taxes paid to New York), you may still owe some state taxes. It’s important to carefully review your tax returns or consult a tax professional.

4. Do NYC Taxes Apply to Non-Residents?

If you're wondering whether New York City (NYC) will tax your income as a non-resident, the answer is no—but with an important caveat.

While New York State taxes non-residents, NYC’s local income tax only applies to residents. Therefore, as a New Jersey resident working in New York City, you won’t be subject to NYC’s additional local income tax. However, you will still be responsible for New York State taxes.

Key Points to Remember:

  • NYC income tax applies only to New York City residents.

  • As a New Jersey resident, you are exempt from paying NYC income tax.

5. Filing Tips to Save Time and Money

Filing taxes in multiple states can be time-consuming and confusing. Here are some tips to help streamline the process and minimize your tax liability:

  • Keep Detailed Records: Track your New York income separately from your New Jersey income to ensure accurate reporting and to make it easier to claim tax credits.

  • Utilize Tax Software: Many tax preparation software programs can help you navigate multi-state filings and ensure you claim all available credits.

  • Consult a Tax Professional: If you’re unsure about how to file in both states, a tax professional can help you maximize your deductions and avoid common mistakes.

  • File on Time: Be sure to file your taxes by the deadlines for both New Jersey and New York to avoid penalties and interest.

Conclusion

Navigating taxes as a New Jersey resident working in New York City doesn’t have to be overwhelming. By understanding how New York and New Jersey tax systems work, you can ensure that you’re not overpaying and that you’re taking advantage of available credits to minimize your tax liability.

Remember to stay organized, file both your New Jersey and New York tax returns, and don’t forget to claim any credits for taxes paid to the other state.

For a more detailed breakdown, be sure to watch our video on this topic:

👉 Watch the full guide here:TaxPrep YouTube channel

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