If I work in N.Y. and live in N.J., should the payroll company take out N.J. taxes?

Question

I work in Staten Island, N.Y. and live in New Jersey. I told the payroll company that I need N.J. taxes taken out of my paycheck. They said they put it in their system but because N.Y. takes out so much, N.J. is left at a $0.00. Is this true? Shouldn't N.J. be taken out first since I am a resident in that state?

Answer 1

You are responsible for filing a tax return in the state you work in and the state you live in.



You do not get double taxed however. In your case, you would file a NY non-resident return and pay taxes to NY. You should have NY taxes withheld.



You would also file a NJ resident return. NJ will give you a credit for the taxes paid to NY. If NY taxes are higher (as I suspect they are) you will get a credit equal to the amount of tax NJ would have charged on that income. If it were the other way around, you would owe the difference to the state of residence

Answer 2

Unfortunately, your company is correct. NY taxes will be taken out first since it is the state where you work and the company is located and obviously licensed to operate. I have worked in the field of accounting (I reside in NY) and we had many employees who lived in New Jersey and Yonkers. We never double taxed them (i.e., NY and NJ/Yonkers taxes.) However, the general rule of thumb is generally you pay taxes to the state that you reside in. What state's taxes were withheld from your paycheck (this is key)? Most states have agreements with the bordering states as to employees living in one state and residing in another state. Check the instructions for your state. I would call the Department of Taxation of your state to see if NY/NJ has such an agreement (I wouldn't doubt that they do.) In the event your employer is supposed to be taxing you NJ state taxes and NOT NY state taxes they are obviously in serious violation of tax laws. Good luck!

Answer 3

yes, nys tax is higher than nj. you pay nys tax and zero nj tax