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If you work in NYC and the company you work for is based there you won't get away from paying non-resident city income tax. Even if the company you work for does not collect taxes from NYC, you be better off they do withheld NYC taxes for you or else at some point you will get a letter that you owe NYC taxes and they will charge you a penalty with interests.
NYC tax agency is the most aggressive taxing agency in the country. If you owe them taxes they will come after you.
If you work in NYC and the company you work for is based there you won't get away from paying non-resident city income tax. Even if the company you work for does not collect taxes from NYC, you be better off they do withheld NYC taxes for you or else at some point you will get a letter that you owe NYC taxes and they will charge you a penalty with interests.
NYC tax agency is the most aggressive taxing agency in the country. If you owe them taxes they will come after you.
Dude you need a new accountant or must be clicking on the wrong buttons in turbo tax. As babo and others have noted you only pay NYC income tax if you're a resident. I use to live in Hoboken years ago myself while working in Manhattan, and I can guarantee you that I didn't pay. If you did pay that would mean that you're probably working for the NYC gov't since NYC gov't employees are the only exception to the rule. Either that or you're confusing this with NYS tax for which you'll get credit for when filing your NJ tax as a resident. The whole Jersey city waterfront is supported by the fact that people want to avoid paying NYC tax. The real estate there would collapse if you tell all those people that they'd have to pay.
Last edited by bumblebyz; 03-25-2014 at 11:55 AM..
Dude you need a new accountant or must be clicking on the wrong buttons in turbo tax. As babo and others have noted you only pay NYC income tax if you're a resident. I use to live in Hoboken years ago myself while working in Manhattan, and I can guarantee you that I didn't pay. If you did pay that would mean that you're probably working for the NYC gov't since NYC gov't employees are the only exception to the rule. Either that or you're confusing this with NYS tax for which you'll get credit for when filing your NJ tax as a resident. The whole Jersey city waterfront is supported by the fact that people want to avoid paying NYC tax. The real estate there would collapse if you tell all those people that they'd have to pay.
Yes I meant NYS income tax which you have to file as a non-resident but since NJ only gives you a 75% credit of your NYS income taxes paid you end up paying 25%.
Yes I meant NYS income tax which you have to file as a non-resident but since NJ only gives you a 75% credit of your NYS income taxes paid you end up paying 25%.
You pay the higher of the two taxes and can get 100% credit back for what you paid. If in fact there is a big difference it's because the NYS tax rate is much higher for the lower brackets. E.g for income between 40k and 75k the NJ tax is actually about 1% lower. For incomes less than 40k the difference is even greater. Incomes greater than 75k the NJ tax rate is only slightly less than NY. So for state taxes alone NJ residents pay lower as you've already experienced, however, if you work in NY you need to pay NYS taxes.
For NYC residents there's an additional close to 4% for people making 6 figures and that is the tax OP is trying to avoid. For every 100k of income NYC residents pay approx an extra 3700. Combining both NYS and NYC taxes most middle class NYC residents pay about 11%. While commuters pay only the state tax which is less than 7% for most income brackets.
I am a man in my 20's and currently live in Jersey City. I work from my apartment every day. I would prefer to live directly in NYC (for lifestyle reasons), but do not currently do so in order to avoid the NYC resident income tax.
However, what if:
1) I share an apartment in NYC with a friend. However, only his name is on the lease. He pays the monthly rent in full to the landlord, and I pay my share to him in cash under the table.
2) My friend (who lives in NYC already) rents another apartment in NYC. Only his name is on the lease. He pays the monthly rent in full to the landlord, and I pay that full amount back to him under the table.
With both of these methods, my official domicile would be my parents' house located in another state within the US. My friend and I share no connections on any paperwork, so it should be difficult/impossible to link our names together (i.e. it's not like my parents are renting an apartment in NYC in their name for my to live in, in which case it would be obvious to tax regulators that I am trying to avoid paying NYC taxes with some loophole).
Are these viable methods of avoiding the NYC resident income tax?
I really appreciate any comments you may have. Thanks!
It will take them exactly 5 minutes to catch you--- they are much smarter than any 20 year old and based on what you say you are committing fraud. Do you think you are the first one to try this little dodge ? If you want to try make sure anyone who pays you pays you in cash but that probably is not going to happen. They have multiple ways to catch you believe me.
You pay the higher of the two taxes and can get 100% credit back for what you paid. If in fact there is a big difference it's because the NYS tax rate is much higher for the lower brackets. E.g for income between 40k and 75k the NJ tax is actually about 1% lower. For incomes less than 40k the difference is even greater. Incomes greater than 75k the NJ tax rate is only slightly less than NY. So for state taxes alone NJ residents pay lower as you've already experienced, however, if you work in NY you need to pay NYS taxes.
For NYC residents there's an additional close to 4% for people making 6 figures and that is the tax OP is trying to avoid. For every 100k of income NYC residents pay approx an extra 3700. Combining both NYS and NYC taxes most middle class NYC residents pay about 11%. While commuters pay only the state tax which is less than 7% for most income brackets.
We are getting ready to move to greater NYC and I am in a similar dilemma - Jersey City or Brooklyn, or some neighborhoods in Queens. We have an infant who will be about 6 months old by the time we move.
From what I can tell there are a few additional factors to keep in mind with NY vs NJ.
New York State has a standardized deduction of $15,600 for married couples and from what I can tell New York City has a $5,500 one as well. New Jersey has no such deduction.
This in addition to the $12,400 federal deduction for married couples and the credit of up to $3,900 per child, phased out and eliminated above certain income thresholds.
All else equal the net cash realized with $100K AGI for a couple with one child is as follows (have not taken into account any deductions but used calculators to get here):
NYC NJ
AGI Monthly 8333.33 8333.33
Medicaid/Medicare 120.83 120.83
Social Security 516.67 516.67
Federal Tax 1052.08 1052.08
City/State Tax 745.61 319.42
Net Income 5898.14 6324.33
Then the question can you find a rental property with 3 bedrooms (if both working) and 2 bathrooms for less than $3,200? You can but it is difficult - harder in JC near the path than many similarly conveniently located places in Brooklyn/Queens.
new jersey has lower tax rates on lower incomes than nyc/ny state does.
"While New York and New Jersey have similar income tax rates, the tax burden on low-income residents is much lower in New Jersey than in New York. For example, a single filer earning $25,000 in New Jersey falls within the 3.5 percent tax bracket, while the same taxpayer in New York would fall within the 6.45 percent bracket."
nyc residents can pay as much as another 3.5% in tax over living and working in new jersey.
while ny has a high standard deduction we have less income tax brackets in the lower income ranges too. our higher taxes here /standard deduction usually work out higher than the lower taxes /no standard deduction in nj.
Last edited by mathjak107; 04-06-2014 at 02:57 AM..
It will take them exactly 5 minutes to catch you--- they are much smarter than any 20 year old and based on what you say you are committing fraud. Do you think you are the first one to try this little dodge ? If you want to try make sure anyone who pays you pays you in cash but that probably is not going to happen. They have multiple ways to catch you believe me.
Without a paper trail, i still see no way NYC can find out.
Without a paper trail, i still see no way NYC can find out.
NYC and NYS revenue departments will use cellphone records to prove your location. People should just pay what they are legally obligated to pay; if they desire lower taxes they should do some proper tax planning.
Really to determine the most cost effective place to live an analysis of all costs should be done (rent, income taxes, sales taxes, auto costs, food costs, etc), which will vary be locations.
What the OP should do, is go speak to a CPA or EA.
They would probably have to subpeona cell phone records...do you really think they would do it to a 20 year old guy? Not very likely.
But you are correct about looking at other expenses. If you want to live in NYC, the taxes are the least of your economic issues.
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