While New Jersey has a reciprocal tax agreement with Pennsylvania, where you are only taxed in the state where you’re physically working, it does not have a similar agreement with New York. What Do Remote Workers Need to Know for 2021 Tax Season? Your New York employer pays for the commuter tax, called the Metropolitan Commuter Transportation Mobility Tax (MCTMT).īut if you’re self-employed and earn more than $50,000, then you pay a flat 0.34 percent of your total net earnings. If you are a salaried worker, then you don’t. For example, if you sold an apartment in New York City, you will be subject to New York capital gains Created with Sketch. is still taxed based on where it is sourced. The state of New Jersey uses a formula to calculate the maximum percentage that can be credited back to you, though it is usually a substantially large portion.Īlso, keep in mind that other income - interest, dividends, capital gains, etc. However, “this is not a dollar-for-dollar exchange,” says Mark Feinberg, CPA of Feinberg & Company, which has offices in both Manhattan and Fair Lawn, New Jersey. The good news is that you will gain a New Jersey credit back for those taxes being paid to New York. Do You Need to Pay Taxes in Both NY and NJ? Your employer will have withheld New York state taxes throughout the year but you’ll need to file in New Jersey as well. New Jersey residents who work in New York State must file a New York Nonresident Income Tax return (Form IT-203) as well as a New Jersey Resident Income Tax Return (Form NJ-1040). 1 Do You Need to File Tax Returns in New York and New Jersey?
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