Your tax returns will become a little more complicated, but you most likely won't end up paying any more taxes than you would pay if you worked in NYC all year.



Here's how it works when you live in NYC and work in NJ. First, you calculate the taxes that you'll owe to NJ on the money earned while working within that state. Next, since you live in NYC, you calculate your NY and NYC taxes on all of the income you earned during the year. Finally, you take a credit on your NY tax return for the taxes you paid to NJ.



Here's an example. Let's say that your NJ taxes end up being $6,000 for the year, and your NY and NYC taxes end up being $10,000. You would pay the full $6,000 to NJ, and then would only pay $4,000 to NY.



We have many clients in this situation, and they either have their employer in NJ withhold NY and NYC taxes from their pay, or they submit quarterly estimates to cover their projected NY and NYC tax liability.

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Replying to:

I will be working in the State of NJ but living in NYC. Any words of wisdom so that I do not get taxed by NJ State, NY State, and NYC?

Zip Code: cpa@mdtaxes.com