Quick Answer
If you live in New Jersey and work in New York, you generally file a New York nonresident return and pay New York tax on your New York wages. You then file a New Jersey resident return reporting all your income and claim a credit for taxes paid to New York, so the same wages are not fully taxed twice.
Who this affects
Thousands of residents of Middletown, Holmdel, Hazlet, Atlantic Highlands, Matawan and Aberdeen commute by ferry or NJ Transit into Manhattan. Every one of them files in two states.
New York City tax
New York City's resident income tax applies to city residents. Commuters who live in New Jersey generally do not pay it, even though they work in Manhattan.
Remote and hybrid days
New York has a convenience of the employer rule: days you work from home in New Jersey for your own convenience may still count as New York days. Days worked from home because your employer requires it can be treated differently. Keep a simple calendar of where you worked.
Mistakes we see
- Withholding only for New York and owing New Jersey at filing
- Forgetting the New Jersey credit for taxes paid to New York
- Counting all home days as New Jersey days without documentation
- Not adjusting withholding after a job change
General information only. Your situation may differ.
Keep reading
Questions about your own situation? Book an appointment with the My Tax Fella team.