I work in N.J. for an N.Y.C. company. To what state do I pay tax?
By Karin Price Mueller | NJMoneyHelp.com for NJ.com
Q. I was hired in 2021 by a company that’s based in New York City. I was hired, though, to work from my home in New Jersey — not because of COVID, but permanently — and New Jersey taxes were always taken out of my checks. But when I got a year-end bonus, the bonus was taxed by New York, not New Jersey. What state should be taxing me?
A. It sounds like there may be an accounting problem with your employer.
If you permanently work in New Jersey, then New Jersey gets to tax your income, not New York.
When said that your bonus was taxed by New York, we’re guessing you meant that New York taxes were withheld instead of New Jersey.
One thing you could have done when you received your bonus check was to notify payroll of their mistake, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.
“They could have reissued you the paycheck showing New Jersey taxes withheld,” he said. “Since 2021 is over you can’t do that now. By now your state tax withholdings have been sent to New York State.”
But you can take action to make things right.
When you file your 2021 federal and state income tax returns, you should also file a New York Nonresident and Part-Year Resident Income Tax Return (IT-203), Kiely said.
“On this return, you should show zero New York income. You should also show the New York tax that was withheld from your bonus,” he said. “Finally, you should show on line #67 the amount you are due as a refund.”
If you file a paper tax return, he recommends attaching a note stating that the taxes were withheld in error.
Email your questions to Ask@NJMoneyHelp.com.
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.