W-2 reporting for New Jersey Residents working in New York
The New York portion of the W-2: By law, New York employers are required to report in Box 16 of your W-2 the same amount that is reported in Box 1, regardless of what portion of the wages were actually earned in New York. For example, if you earned $50,000 working for a company, but only $20,000 was earned in New York, your W-2 will still list $50,000 in Box 16 for New York.
When you are filling out your return, the amount that you enter in Box 16 for New York should only represent the amount of your income that is taxable to New York. Because of this, the amount you enter in Box 16 may not match exactly what is listed on the hard copy of your W-2. Your New York entry in Box 16 should only list the amount of wages that are taxable to New York (generally this would be Box 1 minus any other states' Box 16 amounts).
The New Jersey portion of the W-2: When you live or work in New Jersey, the amount your employer enters on your W-2 in Box 16 for New Jersey may contain amounts that are actually taxable to another state. For example, if you live in New Jersey but work in New York you may have two (2) box 16 amounts (one for New York and one for New Jersey) and the New Jersey amount may contain income that is actually taxable to New York. In fact, the one for New Jersey may even be slightly higher than the one for New York.
When you are preparing your return, be sure that the amount you entered in Box 16 for New Jersey represents the difference between what your employer reported and all the other Box 16s amounts. Generally, all of your Box 16 entries should add up to be the New Jersey amount on the hard copy of your W-2.
Summary: If your income is shown in box 16 for both New York and New Jersey, you may need to change the New Jersey entry to show only the difference between the income amounts (if any). On the resident return, New Jersey will automatically pull all of the income in Box 16 (regardless of state) to the New Jersey return.
New York requires you to pay taxes on income you earned working there, even though you live in New Jersey. You should prepare a New Jersey Resident return and a New York non-resident return. (Our program will automatically calculate the Credit for Taxes Paid to Another State for your resident return when you have created the non-resident return as well.)
For more information, see the New Jersey Instructions.