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.
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.