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State tax question. I live in NJ. In 2008 my wife worked

State tax question. I...
State tax question. I live in NJ. In 2008 my wife worked in NYC. New Jersey has audited my 2008 tax and is now trying to double tax me. I filled out NJ state tax for myself and NY state tax for my wife - we both had the proper taxes withdrawn from our checks. NJ is trying to add her to my NJ state tax and say that I'm deficient.
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4/1/2013
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,888
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Robin D :

Hello and thank you for using Just Answer,
Did you and your spouse file a joint return for 2008?
If your wife was a New Jersey resident but she had income from sources outside New Jersey,and she was required to pay tax on that income to a jurisdiction outside New Jersey, you may be eligible for a credit against the income tax you owe to New Jersey on your joint filed New Jersey return.
Your spouse would have filed a Nonresident return for NY in 2008. The tax paid to NY would be used as a credit on the New Jersey return so the true amount of tax being assessed now would not be correct.


Customer:

We did not file a joint state return - my return was for NJ her return for NY.

Robin D :

Did you file a joint return for federal?

Customer:

Yes, for Federal it was a joint return.

Robin D :

In general, you must use the same filing status as you used on your Federal return, unless you are a partner in a civil union. If your spouse lived in New Jersey but worked in NY then NJ filing was required.

Customer:

So I had to put her on my state return with her NY income and File a NY return with her NY income. Double taxation?

Robin D :

That is correct, but there would be tax relief due to the tax credit for the taxes she paid in NY.

Robin D :

NJ does not allow you to file married filing sep if you file a joint return for federal.

Robin D :

NJ also taxes residents (which she was) on their total income, but they allow for a credit so you are not taxed twice on that income.

Customer:

They are taxing me twice. In this case they are addign $41,007 to my total and crediting me $1,461. They say I owe $4,048.

Robin D :

You need to rework your return correctly showing the correct amount for filing status and tax credits. They added her income to the return(I am assuming this is the $41,007) and crediting you with the $1461 (was this her true liability for NY?).

Customer:

Added to that, I had a property in AZ at the time - went into forcloser in 2009. Adding $21,00 in retal income - which did not cover the mortgage.

Customer:

NY state credit as they put it.

Robin D :

As a NJ resident that would be proper for NJ to do. All states that have income tax, require total income from all sources when a resident files.
You need to recalucalte the NJ return yourself, or have a professional do it for you.

Robin D :

recalculate* sorry

Robin D :

This will ensure that all deductions and credits are applied, butit also means that as residents, you both must report total income too.

Robin D :

Based on what you have stated, unfortunately, your NJ reporting was not correct for the tax year.

Robin D :

If you had a professional prepare it contact them ASAP.

Customer:

So they are correct and I have no recourse

Robin D :

If you prepared yourself you may want to get a professional to go over the info so you can make sure you are not taxed on more than you should.

Robin D :

I am not implying you have no recourse

Robin D :

Your return was not right but that does not mean you owe exactly what the state is assessing

Customer:

Well I'm currently in federal bankrupcty and hiring an accountant is not possible. I will have to have them file a petition with the court.

Robin D :

Then you can recalculate the 2008 return yourself. This time just make sure that you include the total income form all sources, Use your deductions combined and then apply the tax credit from what her true tax would be for a nonresident of NY.

Robin D :

You do not need an accountant, a tax preparer would be the correct person. They are not as expensive as a CPA would be.

Customer:

ok thank you

Robin D :

Your positive rating is always thanks enough.

If you could also participate in the very short survey that Just Answer will send you by e-mail I would appreciate that very much.
I really enjoyed working with you – please feel free to request me again when you come back to ask another question.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,888
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
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Robin D.
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Category: Tax
Satisfied Customers: 15,888
15,888 Satisfied Customers
Experience: 15years with H & R Block. Divisional leader, Instructor

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