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NJ tax credit for income tax paid to multiple out of state jurisdictions

GHill
Level 1

client lived in NJ all year. Worked in PA all year

On their W2 - they had 2 lines for taxes paid  1-PA  2-NJ  the PA part was duplicated income

And they also paid local PA tax on their entire income

Total taxes paid for both of these equal $1795

I coded the NJ return for the credit - code 99 for multiple jurisdictions and the total amount on line 43.

Do you need to send any other info to NJ so that they know what jurisdictions need to accountable for this tax?

   

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2 Replies 2
Accountant-Man
Level 11

NJ and PA have a compact so one state doesn't tax residents of the other state. Your client gets all that PA tax back.

NJ law doesn't give a tax credit for taxes paid to another "state." It's another "jurisdiction." That's why NJ residents get a tax credit for Philly wage tax. Philly is another jurisdiction.

NJ gets a credit for the local tax based on the matching income, local wage compared to NJ wage, but not the PA tax, since it is all refunded. 

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Skylane
Level 8
Level 8

@Accountant-Man is the king of reciprocity.... do what he says and mark it solved