NY/NJ Return

[BPT]

I have a new client (NYC fire fighter) that is looking to move to NJ. He will have to maintain a NY address as a result of his employment with NYC. He will have to file a NYS resident return but I'm not sure if a NJ resident return should also be filed. Would the NYS return have his NY address and NJ resident return show his NJ address? Can he file two resident returns with two different states? Has anyone had to file for a client with this set of circumstances?

[New York Enrolled Agent]

I have a new client (NYC fire fighter) that is looking to move to NJ. He will have to maintain a NY address as a result of his employment with NYC. He will have to file a NYS resident return but I'm not sure if a NJ resident return should also be filed. Would the NYS return have his NY address and NJ resident return show his NJ address? Can he file two resident returns with two different states? Has anyone had to file for a client with this set of circumstances?

Members of FDNY are required to live in NYC or in one of (I believe) 6 other counties in NYS. I'd tell him to be careful about "looking" to move to NJ. I'd also caution you about possible exposure to not preparing state returns correctly.

[BPT]

That is my concern. I don't see how there is any way to do this properly. If he files a NY resident return then he can't file a NJ resident return also. Thank you for the feedback. Much appreciated.

[Lion]

Unfortunately, he CAN be a resident of two states. He will NOT get a credit for taxes paid to another jurisdiction in that case, though. More importantly, in your client's scenario, he might NOT be a NYC or NYS resident after moving and jeopardize his job. Do NOT jeopardize YOUR job. Due diligence.

[dtlee]

I agree with the responses above, but I want to make an important distinction.

While the mere act of maintaining an abode in New York City (or the other nearby counties) may be sufficient evidence to require him to file a New York State (and possibly New York City) tax return (New York may consider it proof that he has ties to New York and intends to return to New York....see numerous articles and threads here and elsewhere and this NY State Document). these rules are unlikely to match the employment requirements. Thus, since it is possible that he will lose his job and/or lose retirement credits, he probably should not take advice from you on how to retain his job, but seek competent legal advice. A high school teacher I had who wanted to claim residence invalidly also was charged with insurance fraud because of where he claimed to live versus where he actually lived.

You can easily prepare a tax return as a full year resident of both New York and New Jersey, but unless you are a lawyer, I would stay away from all the other issues.

[dtlee]

By the way, even if he is using a New Jersey Address as his mailing address, New York has a place to document his actual residence and school district information as of 12/31 of the prior year on the IT-201. Your current mailing address does not identify where you lived in the prior year on any tax return. Likewise, as a statutory resident of New York, you are not required to show a New York State mailing address to pay New York State resident taxes.

[BPT]

Thanks all for the feedback. Super helpful as I'm a new Tax Book member.

[Uncle Sam]

If your client is a resident outside of NYC, and works for NYC government, if he started working there after July 1973 - he would be required to file a NYC-1127 that taxes that person as if they were a NYC resident.

[Rapid Robert]

Unfortunately, he CAN be a resident of two states. He will NOT get a credit for taxes paid to another jurisdiction in that case, though.

Is that a special case for NY & NJ? It is not true in the general case. The OSTC (other state tax credit) is based on source income from one state that is taxed by both jurisdictions, not on where you are a resident. Most states give the OSTC on their own resident return.

For example, if you are a resident of State A, and have source income from State B, you will be taxed on that income by State A, and get a credit for the double-taxation by State B. At the very same time, if you are ALSO a resident of State B, and have source income from State A, you will be taxed on that income by State B and get OSTC for tax paid on same income to State A. This completely eliminates double taxation on source income that is based on where work is performed/provided, or where property is located.

On the other hand, if you have income from intangibles that is sourced to where you are a resident (e.g. interest income), then yes, you may end up being double taxed on that. However, that makes sense, since as a resident of both states, you are presumably getting the benefits of being a citizen of each state. (double benefits = double tax cost)

[Lion]

Took a lot of courses during the pandemic about employees working from home for their old company/different state and whether both states have the convenience of the employer rule or only one state does. Employees can get themselves more taxes than they anticipated. So, can companies that unknowingly add nexus in a new state. Facts and circumstances. As I said, Due Diligence. I would never try to interpret the legal requirements for a job; I'd recommend a good labor lawyer.

By the way, the OSTC doesn't always get rid of the OST unless the OS has a lower tax rate. My CT commuters get the OSTC due to paying taxes to NY, but it credits them ONLY the CT tax rate on that income and does NOT credit them for the full taxes they paid NY. They don't pay tax twice on their NY-sourced income, but they DO pay the higher NY tax rate on that income. Very high wage-earning NYers who move to CT thinking they'll pay lower income taxes are unpleasantly surprised if their income is mostly wages, because the lower CT tax rate benefits them only on a little bank interest or wife's PT job and not on their large W-2.

[dtlee]

If your client is a resident outside of NYC, and works for NYC government, if he started working there after July 1973 - he would be required to file a NYC-1127 that taxes that person as if they were a NYC resident.

This is an important point. They must live in one of the five boroughs of New York City (Bronx, Brooklyn, Manhattan, Queens or Staten Island) or in one of these New York counties: Westchester, Putnam, Rockland, Orange, Nassau or Suffolk County. If they live outside of the city, they will be required to pay the Section 1127 employment fee equivalent to a New York City resident tax. Thus, there are no true savings for living outside of the city. However, living in New Jersey could cost him plenty. Another thing I recently read about was a person who retroactively lost medical benefits after a long illness. It is not a good idea to risk health insurance during a pandemic.

This is looking less and less like a tax question.