IT-203 · NJ-1040 · Schedule NJ-COJ
Tax Returns for New Jersey Residents Who Work in New York
Live in New Jersey and work in New York, and you file in both states. New York taxes the pay you earn there, New Jersey taxes everything, and the credit between them is where most of the money is. We prepare both returns together, starting with how many days you actually worked in New York.
Monday to Friday 10am to 6pm, weekends 11am to 5pm.
How the two returns fit
Two states, one paycheck.
IT-203
New York taxes your New York pay
New York first figures tax on all of your income as if you lived there, then keeps only the New York share. That means a spouse’s New Jersey pay can raise the rate on your New York wages without being taxed by New York.
NJ-1040
New Jersey taxes all of your income
As a resident, you report every dollar on the New Jersey return, including the wages New York already taxed.
NJ-COJ
New Jersey credits the New York tax
The credit is the smaller of the New York tax on that income or the New Jersey tax on it. When New York’s tax is higher, you pay the difference.
Withholding
Your employer withholds for New York
A New York employer withholds New York tax based on where you tell it you work, using Form IT-2104.1. If your days change, the withholding should too.
Work-from-home days
New York’s convenience rule still applies.
If your office is in New York, a day you work from home in New Jersey generally counts as a New York day. New York calls this the convenience of the employer rule. The exception is a bona fide employer office at your home, which takes specific steps by your employer. Days you work outside New York because the job requires it, such as client visits or business travel, are not New York days.
- New YorkA day in the New York office
- New YorkA day at home, for your convenience
- Not New YorkA day at a bona fide employer office
- Not New YorkA required day outside New York
Counting the days
The allocation drives both returns.
Wages are split between the states by days worked. Schedule IT-203-B starts with every day in the year, removes weekends, holidays, sick days and vacation, and divides the days worked in New York by the total days worked. Each day counts, so we ask for your own records instead of assuming every weekday was in the office.
- Keep a calendar. Office days, home days and travel days, kept as you go. New York can ask for it in an audit.
- Check your W-2. The New York wages in box 16 reflect what your employer was told, not always what happened.
- Bonuses and stock pay. RSUs are generally allocated by the share of New York workdays between grant and vest, which can reach back into earlier years.
Read our guide to New Jersey residents working in New York for a full walk-through, and RSU and stock option taxes in New Jersey for equity pay.
Situations we see every season
Where commuter returns go wrong.
Moving during the year
A move means part-year resident returns in both states, with income split by the move date. Leaving New York City also means a part-year city return.
An apartment in New York
Keep a permanent place to live in New York for substantially all of the year and spend 184 days or more there, and New York can tax you as a resident even if your home is in New Jersey.
Two incomes, two states
When one spouse works in New York and the other in New Jersey, New York’s rate is set on the couple’s total income. We check how the credit lands on the joint New Jersey return.
New York residents working in New Jersey
The same idea in reverse: a New Jersey nonresident return, and a credit on the New York return for the New Jersey tax.
No reciprocity with New York
New Jersey’s reciprocal agreement is with Pennsylvania only, for employee wages. It does not cover New York.
New York City tax
Nonresidents of the city do not pay New York City income tax, so commuters from New Jersey owe New York State tax only.
Common questions
Questions commuters ask.
Do I pay tax twice on my New York wages?
Mostly no. New York taxes the wages, and New Jersey gives you a credit for that tax. The credit is capped at the New Jersey tax on the same income, so you pay roughly the higher of the two states' tax on that pay.
Do I owe New York City income tax if I work in Manhattan?
No. New York City income tax applies to city residents. Nonresidents of the city are not liable for it, even if they work there every day.
I work from home in New Jersey some days. Does New York tax those days?
Usually yes. If your office is in New York, New York treats days you work from home as New York days unless your employer has established a bona fide employer office at your home. Days you work outside New York because the job requires it are treated differently.
Is there a reciprocal agreement between New Jersey and New York?
No. New Jersey's only reciprocal income tax agreement is with Pennsylvania, and it covers employee wages only. New Jersey residents who work in New York file in both states.
How are my RSUs split between the states?
Generally by the share of your workdays spent in New York between the grant date and the vesting date, even if you lived or worked somewhere else for part of that time.
I moved from New York to New Jersey this year. What do I file?
Part-year resident returns in both states, with income split by the date you moved. If you lived in New York City, the city taxes the part of the year you lived there.
Work in New York, live in New Jersey?
Send last year’s returns and your W-2, and we will check the days and the credit. The first consultation is free.