Let me preface my remarks by stating that I'm not an expert in the aforementioned States... Your assumptions sound correct and I had a similar situation a few years ago... The client was a resident of New Jersey and worked in New Jersey for the entire year for a large corporation.. For some reason his employer allocated part of his wages and withholding to New York State on his W-2 .. When trying to do the allocation /return I ran into issues like you are... I called a CPA in New York and he advised that I tell the client to call his employer and to correct the W-2.. I did that and the corrected W-2 was issued and then there were no problems... Just my opinion...