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Do New Jersey Residents Working From Home Still Have To Pay New York Income Taxes?

TRENTON, N.J. (CBSNewYork) -- The coronavirus pandemic is raising new questions for New Jersey taxpayers.

Their commute to New York City jobs stopped months ago, so who gets their tax dollars -- New York or New Jersey?

Why should New Jersey resident working from home have to pay New York state income taxes for jobs they are no longer commuting to? Legislators from both parties are fighting to keep that money in Jersey with a new bill.

"Well, there's nothing on the books that allows them to do that right now. Right now, they're still an employee of a company based in New York," New Jersey State Senator Paul Sarlo told CBS2's Meg Baker.

RELATED STORY: N.J. District Facing Dilemma In November — A Big Tax Increase Or Drastic Cuts

More taxed income in Jersey could mean major savings for residents.

"The resources from New Jersey's income tax goes into what's called the property tax relief fund," New Jersey State Senator Steve Oroho said.

New Jersey's tax rates are similar to New York state's, so it doesn't affect individuals' total taxes much.

On the flip side, money would be taken away from New York, which trickles down to New York City for basic services.

So what happens this year with your tax returns?

Certified public accountant E. Martin Davidoff says you may be able to prorate which state you pay, even if you alternate where you work week-to-week based on the convenience rule.

RELATED STORY: New Jersey Gas Tax Increasing By Nearly 10 Cents Per Gallon

"I would take the position if your employer doesn't allow you to work in New York anymore and your only choice is to work in your home in New Jersey or Connecticut, I'm gonna say you're not subject to New York state," Davidoff said.

The new law would codify that. More than 400,000 New Jerseyans used to work in New York before the lockdown. Now just 10% have returned, so a change in the tax code could mean millions of dollars are redirected.


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