- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
In speaking to the State of New Jersey Department of Taxation, I was informed that one of my clients' returns had their credits for taxes paid to other states disallowed. I'm not terribly well versed in NJ tax law - can someone tell me why this might occur given state law clearly indicates such taxes paid to other states can be used as an offset against New Jersey income taxes owed? TIA.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Official NJ guidance here: https://www.nj.gov/treasury/taxation/njit14.shtml
There are a couple of pubs at the bottom with detailed information about how the credits are calculated for wage and non-wage income.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Not 100% sure about NJ, but most states only allow taxes paid to other states for residents of their state. Non residents, and part time residents do not qualify
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Do you have any idea which other states you are trying to credit?
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Did they actually file returns in those either states? Most of the time you actually need to file. Merely having withholding for another state doesn't count.
The NJ notice should explain why the credit was disallowed.
The more I know the more I don’t know.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Most of the time, if we have an other state tax credit denied, it is because the state requires a copy of the other states return and we did not include it. Lacerte tries to tell us when to attach, but sometimes it misses giving us a diagnostic telling us to do so. Confirm you included the other state and talk to the state who denied and ask them. They should tell you.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
As it turns out, the State reversed their decision after a review of the facts.At least that's what I've been told.
Good news. But why they disallowed the credit in the first place is a mystery. (The original auditor has retired and didn't leave an explanatory note.)
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
FYI, both NJ and PA often "cannot find" tax copies from the other state, even when we attach PDFs to the home state e-file. Very convenient for them.
I used to need to mail in paper copies.