State Taxes Living in NJ, Working in NY

[phatcat43]

Hi-
Can anyone help figure out a hypothetical tax situation? I currently live and work in NYC, and am therefore subject to both NYC and NY state taxes. I'm trying to figure out what my state/local tax burden would be if I moved to NJ but continued to work in NYC.

-- Would I still have to pay NYC tax if I worked in NYC but lived in NJ?
-- How would my state taxes net out? I understand I would pay NYS tax but would get a credit on my NJ state taxes.

Any general guidance on this would be extremely helpful. I would also very much like to know what I would pay in taxes in NJ if I had taxable income of $85,000.

[Nashville]

Best Guidance

FatCat, the best guidance we can give would be to refer you to a tax professional in your area. We have a couple good ones in your area who may post to your question, or they might send you a private message. The general response from most of the participants here is to refer your to a local professional.

This is by no means a trivial question. From the standpoint of significant dollars, state taxes don't pose much of a problem for most of us. But NY and NJ taxes are so high that a decision to move (especially when coupled with property taxes) can amount to big bucks annually. This may also be affected by your occupation, meaning whether your income is subject to reciprocity withholding.

You really need a local pro here. I, for example, live in the south and would not be able to put my arms around the calculations well enough to help with NJ, NY, and NYC.

Best of luck -

[Lion]

Agree

Definitely go to a local tax pro for a consultation, maybe one in NJ near the border with lots of NYC commuters. The money you spend will save you more over time, or at least make you aware of what you're getting into so you can withhold properly or pay NJ estimated taxes if your employer won't withhold for both states.

If you insist on free advice, then research your situation yourself because you know it best. If you've been filing your own taxes, then get a NJ booklet as well as your NY/NYC and redo your 2007 returns as if you lived in NJ while working your current job to see what your state taxes will be for a full year. That's the only way to compare apples to apples (big apple?). Yes, you will avoid the NYC tax if not a NYC resident (resident of NYS, NJ, CT, PA, etc.). But, have you priced train tickets and parking, yet?!

Also, be aware that if you move during a year, you will have both a NJ part-year resident return as well as a NJ non-resident return during your first year. That's a royal pain to prepare, and well worth the cost to have a professional prepare your returns that year. So, get to know a tax pro now during his/her slow time and give him a chance to learn your situation before tax season. Take a copy of last year's return.

In fact, most multi-state returns are so time-consuming that it's worth the money to have them professionally prepared. And, both NY and NJ are high tax rate states with tough tax departments that make you pay dearly for errors. Pay a pro. NAEA.org to find a tax pro in the area of your prospective home or any other location.

Don't forget to file new withholding forms with your employer.

[phatcat43]

Thanks...

I'm happy to pay for advice from someone who knows the tax situation. Its worth it if there are tax savings to be had! I know I would save quite a bit living and working in NJ, but the NY/NJ combination is much trickier to figure out.

Send me a private message if interested...thanks again