Client resided in AZ entire 2010 and did not physically work in NJ but he did physically work there in 2009. Client received a W-2 for 2010 from his employer he worked for in NJ in 2009 with NJ withholdings. I filed a N.J. non resident 2010 return with the hopes of receiving 100% of all NJ withholding but NJ has informed me they are withholding 42.5% of the total NJ withholding due to "NJ source income” and issuing a check for the balance of the withholdings to my client. I am guessing I should amend their 2010 AZ tax return claiming credit for the 42.5% of the total NJ withholding NJ witheld.
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Assuming you did not claim the withholding on the original return because you thought it was all going to be returned, then yes, you will have to amend. I have one every year for a non-resident NJ partnership, so I deduct all withholding on Sche A, and then report the partial refund the following year on 1040.Last edited by Burke; 08-22-2011, 02:17 PM. -
NJ source
From what you say, the NJ income was earned in 2009 but paid to him in 2010. As such I would think this is NJ source and taxable by NJ (it was earned while taxpayer was physically present in NJ). Had it been earned in 2010 it would not be NJ source and you should have be able to get the withheld amounts returned to client.Comment
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I think most
states now are going for income to be taxed in the state it is earned in. Deferred comp plans I think the sate where it was earned will still get to tax it even if you have left the state for years. Retirement plan distributions are an exception to this thanks to the federal government stopping California from going there.Comment
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You better believe it. All states are scrounging for revenue -- hence all the withholding on income sourced within their state now. Even on sales of property in many cases.Comment
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