Have a Tax Question? Ask a Tax Expert
If I live in NYC and work in NJ do I pay three taxes?
Income generally is taxes based either on the source of income or on the residency.
As you work in NJ - the income is considered from NJ source and is taxable for NJ - you will file NJ tax return as non-resident
As you are a resident of NY - all your income regardless its source is taxable - including the income you earn in NJ - you will file NY tax return as a resident.
However - you will be able to claim a credit for taxes paid to NJ - so there will not be any double taxation.
Let me know if you need help with reporting or reference to forms.
Right I understand I would receive a credit come tax time but I mean on my paycheck, will the three taxes be deducted every pay day? When I lived in NJ and worked in NYC I would only pay NY state tax and then my NY state refund would just go to Jersey to cover my Jersey taxes and then I would just owe a little more. Will the same thing happen in reverse?
You need to have all taxes to be withheld from or paycheck - or - if your employer doesn't withhold NY tax - you need to do estimated payments on your own.
Because NY tax is generally higher - you will eventually pay to NY the difference between NJ tax and NY tax.
The reserve is also true - if you lived in NJ and worked in NYC - you would pay NY tax as non-resident and NJ tax as a resident, however - you need to consider following:
- NYC doesn't tax non-residents - so no city tax.
- because NY tax is normally higher - the credit on NJ tax return will cover all NJ tax liability - so - generally - there will not be any NJ tax.
Let me know if you need help with reporting.