N.J. Admin. Code § 18:35-4.1 - Computation of credit for taxes paid to other jurisdictions
(a) The
following provisions shall govern the computation of the tax credit by reason of any
income or wage tax paid to another state or political subdivision of such state
under the New Jersey Gross Income Tax Act (Act).
1.
54A:4-1 provides for a credit against
the New Jersey gross income tax as follows: Resident credit for tax of another
state.
i. A resident taxpayer shall be allowed a
credit against the tax otherwise due under this Act for the amount of any income tax
or wage tax imposed for the taxable year by another state of the United States or
political subdivision of such state, or by the District of Columbia, with respect to
income which is also subject to tax under this Act, except as provided by (a)3
below.
ii. The credit provided under
this section shall not exceed the proportion of the tax otherwise due under this Act
that the amount of the taxpayer's income subject to tax by the other jurisdiction
bears to his or her entire New Jersey income.
2. The credit against the New Jersey tax applies
with respect to the income tax or wage tax paid in the other state or political
subdivision thereof on income which is also subject to tax under the New Jersey Act.
Therefore, there shall be excluded from the income in the other state any income
which is not subject to tax under the New Jersey law.
3.
54A:4-1(b), (c), and
(d) provide for a limitation on the credit for tax
paid to another state or political subdivision. The amount of the resident taxpayer
credit for tax paid to another state or political subdivision shall not exceed the
percentage derived by dividing income subject to tax in the other jurisdiction by
the taxpayer's entire New Jersey income multiplied by the tax otherwise due under
the New Jersey Gross Income Tax Act.
i. No credit
shall be allowed for any income tax or wage tax imposed on S corporation income
allocated to this State as determined in accordance with
54A:5-10.
(1) When the New Jersey corporation business tax
allocation factor is 100 percent but the S corporation in fact pays tax to another
state based on or measured by income, the amount of income taxed, which qualifies
for a reduction on the New Jersey corporation business tax return, is deemed S
corporation income allocated outside of New Jersey. This S corporation income is
subject to the gross income tax. In addition, if the taxpayer is required to file a
personal income tax return in the other jurisdiction reporting the S corporation
income, the taxpayer would be eligible for credit for taxes paid to another
jurisdiction.
(2) Payment of a minimum
tax to another state by an S corporation does not fulfill the criteria of (a)3i(1)
above. Therefore, income is not deemed to be S corporation income allocated outside
of New Jersey for gross income tax purposes. If the taxpayer is required to file a
personal income tax return in the other jurisdiction reporting S corporation income,
the taxpayer is not eligible for a credit for taxes paid to the other
jurisdiction.
(3) When an S corporation
with a New Jersey corporation business tax allocation factor of 100 percent reports
entire net income that is subject to Federal corporate income taxation on the New
Jersey corporation business tax return and the corporate tax return of another state
and the tax paid to the other state qualifies for a reduction on the New Jersey
corporation business tax return, the amount of income taxed by both jurisdictions is
deemed S corporation income allocated outside of New Jersey. If the taxpayer is
required to file a personal income tax return in the other jurisdiction reporting
the S corporation income, the taxpayer is eligible for a credit for taxes paid to
another jurisdiction, subject to statutory limitations, including those in
54A:4-1(b), (c), and
(d).
ii. No credit shall be allowed for any income tax
or wage tax imposed on S Corporation income allocated to this State as determined in
accordance with
54A:5-10.
(1) When the New Jersey Corporation Business Tax
allocation factor is 100 percent but the S Corporation in fact pays tax to another
state based on or measured by income, the amount of income taxed, which qualifies
for a reduction on the New Jersey Corporation Business Tax return, is deemed S
Corporation income allocated outside of New Jersey. This S Corporation income is
subject to the Gross Income Tax. In addition, if the taxpayer is required to file a
personal income tax return in the other jurisdiction reporting the S Corporation
income, the taxpayer would be eligible for credit for taxes paid to another
jurisdiction.
(2) Payment of a minimum
tax to another state by an S Corporation does not fulfill the criteria of (a)3ii(1)
above. Therefore, income is not deemed to be S corporation income allocated outside
of New Jersey for gross income tax purposes. If the taxpayer is required to file a
personal income tax return in the other jurisdiction reporting S Corporation income,
the taxpayer is not eligible for a credit for taxes paid to the other
jurisdiction.
(3) When an S Corporation
with a New Jersey Corporation Business Tax allocation factor of 100 percent reports
entire net income that is subject to Federal corporate income taxation on the New
Jersey Corporation Business Tax return and the corporate tax return of another state
and the tax paid to the other state qualifies for a reduction on the New Jersey
Corporation Business Tax return, the amount of income taxed by both jurisdictions is
deemed S corporation income allocated outside of New Jersey. If the taxpayer is
required to file a personal income tax return in the other jurisdiction reporting
the S Corporation income, the taxpayer is eligible for a credit for taxes paid to
another jurisdiction, subject to statutory limitations, including those in
54A:4-1(b), (c) and
(d).
iii. No credit shall be allowed for the amount of
any taxes paid or accrued for the taxable year on or measured by profits or income
imposed on or paid on behalf of a person other than the taxpayer, whether or not the
taxpayer may be liable for the tax.
4. For the purpose of calculating the resident
credit for taxes of another state, "taxpayer" means any individual, estate or trust
required to report or pay taxes, interest and penalties under the Gross Income Tax
Act, or whose income in whole or part is subject to the tax imposed by the Gross
Income Tax Act.
5. If the tax of another
state or political subdivision is readjusted for more or less of the tax of another
state or political subdivision than taxpayer is finally required to pay, the
taxpayer shall send notice of the difference to the Director who shall redetermine
the tax liability for any years affected, regardless of any otherwise applicable
statute of limitations, provided that:
i. The
taxpayer is allowed a credit under this section;
ii. The taxpayer has filed a return with the other
jurisdiction prior to the readjustment; and
iii. The taxpayer claimed a credit for taxes paid
to that other jurisdiction on the original New Jersey tax return.
6. For purposes of determining the
percentage, as provided in (a)3 above, for limitation of the tax credit:
i. Income subject to tax by the other jurisdiction
means those items of income that are taxed by another jurisdiction before the
allowance for personal exemptions and standard and/or other itemized deductions and
which are also subject to tax under the New Jersey Gross Income Tax Act. "Subject to
tax" is defined as income actually taxed.
ii. Entire New Jersey income means the New Jersey
gross income subject to tax before allowances for personal exemptions and
deductions.
iii. Adjustment must be made
in the numerator for taxpayers who claim credit for income in the numerator which
has been only partially taxed by the other jurisdiction.
iv. The actual tax paid to the other jurisdiction
is the amount of tax that is due after deduction of all tax credits allowed by that
jurisdiction (for example, child and dependent care, new job, research and
development), but before the deduction of any payments made by the taxpayer, whether
made as withholdings, estimated payments, extension payments, or an overpayment from
a prior year.
v. Where there is a
reduction in the numerator of the credit fraction for the allowable credit, there
must be a corresponding reduction in the allowable tax paid.
7. As a result of the Reciprocal Personal Income
Tax Agreement between the Commonwealth of Pennsylvania and the State of New Jersey,
wages, salaries, and other compensation paid to New Jersey residents employed in
Pennsylvania are not subject to Pennsylvania income tax. Thus, a New Jersey resident
may not claim a credit for taxes paid to Pennsylvania on employee
compensation.
8. Taxes paid on income by
a resident taxpayer to any municipality of Pennsylvania are eligible for the
resident tax credit. For example, taxes paid under the City of Philadelphia Wage Tax
would be eligible.
i. A W-2 Form must be attached
to the New Jersey Gross Income Tax Resident Return (Form NJ-1040) to indicate the
name of the municipality, the amount subject to the municipal Wage Tax, and the
amount of tax withheld.
9.
The New Jersey tax on gross income does not tax partnerships directly. See
54A:2-2. Income taxes measured by
profits or income, and paid by a partnership to another jurisdiction are deemed
taxes paid by the individual partner and as such are eligible for the resident
credit. For example, the New York City Unincorporated Business Tax, the Philadelphia
Business Privilege Tax and Net Profits Tax are taxes paid by the partnership, which
are eligible for the resident credit. The Texas Margin Tax is not an income tax and,
therefore, a credit is not allowed.
i. The partner
must retain adequate records, to be submitted upon request to the Division, to
substantiate the credit claimed, such as a copy of the partnership's tax return
indicating the amount of the profits or income subject to tax and the amount of tax
paid; or
ii. A statement on the
partnership's letterhead listing the jurisdiction, the taxpayer's share of gross
income taxed by the other jurisdiction, and any other information the Director may
require is considered prima facie evidence of such amount of tax paid to the taxing
jurisdiction and/or political subdivision.
10. Any income that has been excluded or deducted
from taxable gross income of another jurisdiction or which has not been taxed by
another jurisdiction shall not be included in the numerator of the credit fraction.
Example: If a portion of long-term capital gains from the sale of property in State
A is excluded from taxable income in that state, such excluded portion shall not be
included in the numerator of the credit fraction. In addition, income that is not
included in entire New Jersey income shall not be included in the numerator.
i. A partner must adjust his or her share of the
distributive share of partnership income in the numerator of the credit calculation
for adjustments allowed by New Jersey but not other jurisdictions. This section also
applies to composite returns.
11. When determining the resident credit allowed,
as defined in this section, a New Jersey resident taxpayer shall not combine in the
numerator (Schedule A, Line 1, NJ-1040) the same income subject to tax by the
jurisdiction and/or its political subdivision. The amount of income or wage tax
during the tax year shown on Schedule A, Box B, NJ-1040) for the taxpayer paying
both a tax to another state and to a political subdivision of such state would be
the total amount of state income tax and income tax or wage tax paid to the other
state and political subdivision of such state, where the same amount of income is
subject to tax in both the other state and political subdivision of such state. If
the income subject to tax in both the other state and political subdivision of such
state is not equal, a separate calculation shall be made of the excess income to
arrive at the limitation of the credit for the income tax or wage tax paid to the
other state and political subdivision of such state.
i. When claiming a credit for the taxes paid to
another jurisdiction and/or political subdivision, the taxpayer must retain a signed
copy of the tax return filed with the other jurisdiction and/or political
subdivision showing the amount of the tax paid and must make it available at the
Division's request.
(1) Taxpayers filing
electronically with New Jersey must retain a copy of such signed return filed with
the other jurisdiction and all supporting schedules and must make them available at
the Division's request.
(2) If the
taxpayer filed electronically in the other jurisdiction, a copy of the
electronically filed income tax return(s) alone is not sufficient. Electronic filers
must also submit schedules, worksheets, etc., which document the income, by nature
and source, being taxed by the other jurisdiction.
(3) A W-2 form or its equivalent which indicates
the withholding of income tax in another jurisdiction and/or political subdivision
is considered prima facie evidence of such amount of tax paid only if the taxing
jurisdiction and/or political subdivision imposing an income tax or wage tax does
not have a tax return.
(4) If the
taxpayer is a member of a group which files a composite return with another
jurisdiction, a statement on the filing entity's letterhead listing the
jurisdiction, the taxpayer's share of gross income taxed by the other taxing
jurisdiction, and the taxpayer's share of tax paid is considered prima facie
evidence of such amount of tax paid to the taxing jurisdiction and/or political
subdivision.
ii. If a
taxpayer claims credit for taxes paid to more than one state on income earned in
that state, a separate computation for the proportional credit limitation shall be
made for each such state.
iii. If a
taxpayer claims credit for taxes paid to one jurisdiction for different amounts of
income taxed at different tax rates, a separate computation for the proportional
credit limitation shall be made for each different amount of income.
12. The credit for tax paid to other
jurisdictions must be determined in accordance with the following examples:
i. Example 1--Determining the denominator of the
credit calculation fraction.
INCOME SUBJECT TO TAX BY NEW JERSEY
Taxpayer B With | ||
Taxpayer A | Pension Less | |
Without Pension | Exclusion(s) | |
Wages | $ 70,000 | |
Interest | $ 250 | $ 4,000 |
Dividends | $ 400 | $ 2,500 |
Gains | $ 1,525 | |
Pension/Annuity/IRA | 0 | $ 30,000 |
Pension Exclusion | 0 | ($ 15,000) |
Taxable Pension | $ 15,000 | |
S Corporation Income | $ 21,000 | 0 |
Income Subject to Tax Before | $ 91,650 | $ 23,025 |
Exemptions and Deductions
ii. Example 2--Determining the credit for income
taxed both by another state and by a city within that state when the state and city
are taxing the same amount of income. INCOME SUBJECT TO TAX
New Jersey | Other State | Other City | |
Wages | $ 45,000 | $ 30,000 | $ 30,000 |
Income Subject to Tax | $ 45,000 | $ 30,000 | $ 30,000 |
Before Exemptions and | |||
Deductions | |||
Less Exemptions | ($ 2,000) | ||
New Jersey Taxable Income | $ 43,000 | ||
Tax | $ 683 | $ 1,600 | $ 135 |
Numerator of the Credit | $ 30,000 | ||
Calculation |
iii.
Example 3--Determining the credit when income is taxed by two different states
outside of New Jersey. INCOME SUBJECT TO TAX
New Jersey | New York | Delaware | |
Wages | $ 20,000 | $ 12,000 | $ 8,000 |
Interest | $ 1,000 | ||
Dividends | $ 2,000 | ||
New York Adjustments | ($ 1,500) | ||
Income Subject to Tax | $ 23,000 | $ 10,500 | $ 8,000 |
Before Exemptions and | |||
Deductions | |||
Less Exemptions | ($ 2,000) | ||
New Jersey Taxable Income | $ 21,000 | ||
Tax | $ 298 | $ 600 | $ 130 |
Numerator of the Credit | ($ 10,500) | ($ 8,000) | |
Calculation |
iv.
Example 4--Determining the numerator of the credit calculation fraction when the
taxpayer allocates his income in the other jurisdiction.
INCOME SUBJECT TO TAX
Other | |||
New Jersey | Jurisdiction | Both | |
Wages | $ 125,000 | $ 100,000 | $ 100,000 |
Income Subject to Tax | $ 125,000 | $ 100,000 | $ 100,000 |
Before Exemptions and Deductions | |||
Less Exemptions | ($ 1,000) |
New Jersey Taxable Income | $ 124,000 | |
Tax | $ 5,773 | $ 4,800 |
Numerator of the Credit | $ 100,000 | |
Calculation |
v.
Example 5--Determining the numerator of the credit calculation fraction when part of
New Jersey income is taxed by the other jurisdiction.
INCOME SUBJECT TO TAX
Other | |||
New Jersey | Jurisdiction | Both | |
Wages | $ 12,500 | $ 12,500 | $ 12,500 |
Interest | $ 2,000 | ||
Dividends | $ 3,000 | ||
Capital Gains | $ 21,000 | ||
Income Subject to Tax | $ 38,500 | $ 12,500 | $ 12,500 |
Before Exemptions and | |||
Deductions | |||
Less Exemptions | ($ 2,500) | ||
New Jersey Taxable Income | $ 36,000 | ||
Tax | $ 560 | $ 400 | |
Numerator of the Credit | $ 12,500 | ||
Calculation |
vi.
Example 6--Determining the credit for wage income earned in another jurisdiction if
wages were reduced by allowable deductions for New Jersey tax purposes. Determining
the actual tax paid to the other jurisdiction on wages taxed by both New Jersey and
the other jurisdiction.
INCOME SUBJECT TO TAX
New Jersey | Philadelphia | Both | |
Wages | $ 500,000 | $ 500,000 | |
Less 401(k) Contributions | ($ 30,000) | $ 470,000 | $ 470,000 |
Interest | $ 100,000 | ||
Dividends | $ 200,000 | ||
Income Subject to Tax | $ 770,000 | $ 500,000 | $ 470,000 |
Before Exemptions and Deductions | |||
Less Exemptions | ($ 1,000) | ||
Medical Deduction | ($ 5,000) | ||
New Jersey Taxable | $ 764,000 | ||
Income | |||
Tax | $ 51,488 | $ 18,858 | |
Numerator of Credit | $ 470,000 | ||
Calculation |
Calculation of tax paid to other jurisdiction on wages taxed by both New Jersey and other jurisdiction.
Wages taxed by both jurisdictions | $ 470,000 = 94% of wages are allowable in numerator |
Wages taxed by Philadelphia | $ 500,000 |
Tax paid to Philadelphia | $ 18,858 |
Adjustment % | x 94% |
Actual tax paid on wages allowable in numerator | $ 17,727 |
Calculation of Maximum Credit Allowable | |
470,000 | |
X 51,488 = 31,428 maximum credit allowable | |
770,000 | |
Actual tax paid on wages allowable in numerator 17,727 | |
Credit allowed is 17,727, the lower of the maximum credit allowable or the actual tax paid to the other jurisdiction on income taxed by both New Jersey and the other jurisdiction. |
vii.
Example 7--Determining the credit when there is partnership income earned in two
different jurisdictions outside New Jersey and a separate New Jersey partnership
which has a loss.
INCOME SUBJECT TO TAX
New Jersey | State 1 | State 2 | |
Wages | $ 100,000 | ||
Interest | $ 200 | ||
Partnership Income | |||
Partnership ABC $ 10,000 | $ 10,000 | ||
Partnership XYZ $ 5,000 | $ 5,000 | ||
Partnership KLM $ 7,000 | |||
Partnership GSS ($ 12,000) | $ 10,000 | ||
Income Subject to Tax Before | $ 110,200 | $ 10,000 | $ 5,000 |
Exemptions and Deductions | |||
Less Exemptions | ($ 1,000) | ||
New Jersey Taxable Income | $ 109,200 | ||
Tax | $ 4,830 | $ 650 | $ 150 |
Effective Tax Rate | 6.50% | 3.00% | |
Numerator of Credit | $ 10,000 | 0 | |
Calculation |
viii.
Example 8--Determining the credit for income taxed by New York State and New York
City Unincorporated Business Tax (UBT).
INCOME SUBJECT TO TAX
New Jersey | New York | UBT | |
Wages | $ 25,000 | ||
Interest | $ 15,000 | ||
Dividends | $ 10,000 | ||
Capital Gains | $ 25,000 | ||
Net Profits from Business | $ 100,000 | $ 75,000 | $ 100,000 |
Income Subject to Tax Before | $ 175,000 | $ 75,000 | $ 100,000 |
Exemptions and Deductions | |||
Less Exemptions | ($ 2,000) | ||
New Jersey Taxable Income | $ 173,000 | ||
Tax | $ 6,978 | $ 6,600 | $ 4,000 |
Numerator of the Credit | $ 75,000 | $ 25,000 | |
Calculation |
(1) Example
8a--Determining the credit for income taxed by New York State and New York City
Unincorporated Business Tax (UBT) when there is income taxed by New York City, which
is not taxed by New Jersey.
New Jersey | New York | UBT | |
Wages | $ 50,000 | $ 25,000 | |
Interest | $ 10,000 | ||
Dividends | $ 20,000 | ||
Capital Gains | $ 15,000 | ||
Partnership Income | $ 200,000* | $ 100,000** | $ 110,000*** |
Keogh deduction | ($ 10,000) | ||
Income subject to tax Before | $ 285,000 | $ 115,000 | $ 110,000 |
Exemptions and Deductions | |||
Exemptions | ($ 2,000) | ||
New Jersey Taxable income | $ 283,000 | ||
Tax | $ 16,980 | $ 7,475 | $ 4,400 |
Numerator of the Credit | $ 115,000 | $ 10,000**** | |
Calculation |
* | Partnership Income per Federal K-1 | |
Ordinary Income | $ 200,000 | |
** | 50% of partnership income allocated to New York State | $ 100,000 |
*** | UBT partnership Income | |
50% of Ordinary Income | $ 100,000 | |
UBT adjustments not required for Federal or | ||
New Jersey purposes | $ 10,000 | |
Total UBT | $ 110,000 | |
**** | UBT Credit Numerator | |
Total Partnership Income Amount used in determining New York State | $ 110,000 | |
credit | ($ 90,000) | |
Income not taxed by New Jersey | ($ 10,000) | |
Allowable Numerator | $ 10,000 |
ix. Example 9--Determining the credit when S
corporation income is reported on the other jurisdiction's return in separate
categories.
INCOME SUBJECT TO TAX
Other | |||
New Jersey | Jurisdiction | Both | |
Wages | $ 100,000 | ||
Interest | |||
Personal Interest | $ 200 | ||
S Corporation Interest | $ 2,500 | $ 2,500 | |
S Corporation Income | |||
Ordinary 35,000 | $ 35,000 | $ 35,000 | |
Interest 2,500 | $ 37,500 | ||
Income Subject to Tax Before | $ 137,700 | $ 37,500 | $ 37,500 |
Exemptions and Deductions | |||
Less Exemptions | ($ 1,000) | ||
New Jersey Taxable Income | $ 136,700 | ||
Tax | $ 6,582 | $ 2,625 | |
Numerator of the Credit | $ 37,500 | ||
Calculation |
x.
Example 10--Schedule C adjustments to income which are also taxable to New Jersey
are included in the numerator of the credit calculation fraction.
INCOME SUBJECT TO TAX
New Jersey | Other Jurisdiction | Both | |
Wages | $ 100,000 | $ 100,000 | $ 100,000 |
Interest | $ 200 | ||
Net Profits from 35,000 | $ 25,000 | $ 25,000 | |
Business | |||
Taxes Based on 1, 000 | $ 36,000 | $ 1,000 | $ 1,000 |
Income | |||
Income Subject to Tax Before | $ 136,200 | $ 126,000 | $ 126,000 |
Exemptions and Deductions | |||
Less Exemptions | ($ 1,000) | ||
New Jersey Taxable Income | $ 135,200 | ||
Tax | $ 6,486 | $ 8,820 | |
Numerator of the Credit | $ 126,000 | ||
Calculation |
xi.
Example 11--Determining the credit for Philadelphia partnerships subject to the
Philadelphia Business Privilege Tax (BPT), Philadelphia Net Profits Tax (NPT), and
the Pennsylvania Income Tax.
INCOME SUBJECT TO TAX
New Jersey | PA Income | Phila BPT | Phila NPT | |
Wages | $ 100,000 | |||
Interest | $ 200 | |||
Partnership ABC | $ 500,000 | $ 225,000 | $ 275,000 | $ 275,000 |
Income Subject to Tax Before | $ 600,200 | $ 225,000 | $ 275,000 | $ 275,000 |
Exemptions and Deductions | ||||
Less Exemptions | ($ 1,000) | |||
New Jersey Taxable Income | $ 599,200 | |||
Tax Liability | $ 36,043 | $ 6,300 | $ 17,875 | $ 10,909 |
Less BPT Credit (17,875 x 60%) | ($ 10,725) | |||
Tax | $ 36,043 | $ 6,300 | $ 17,875 | $ 184 |
Effective Tax Rate | 2.80% | 6.50% | 0.067% | |
Actual tax paid to other | ||||
jurisdiction | ||||
PA State Tax | $ 6,300 | |||
Phila BPT | $ 17,875 | |||
Phila NPT | $ 184 | |||
$ 24,359 | ||||
Numerator of Credit Calculation | $ 275,000 |
xii.
Example 12--Determining the credit when there is a loss useable in the other
jurisdiction and there is business income allocated to New Jersey and another
jurisdiction and New Jersey allows expenses/adjustments the other jurisdiction does
not. Determining the actual tax paid to the other jurisdiction on business income
taxed by both New Jersey and the other jurisdiction.
New Jersey | New York | Both | |
Wages | $ 140,000 | $ 80,000 | $ 80,000 |
Interest | $ 80,000 | ||
Dividends | $ 20,000 | ||
Capital gains | $ 10,000 | ($ 3,000)* | ($ 3,000) |
Partnership Income | $ 340,000* | $ 200,000 | $ 170,000** |
Other Deductions | $ 25,000*** | ($ 10,000)**** | |
Less Exemptions | $ 2,000 | ||
Medical deduction | $ 8,000 | ||
Taxable Income | $ 580,000 | $ 255,000 | |
Tax | $ 34,983 | $ 15,300 | |
Numerator of Credit | $ 237,000 | ||
Calculation Credit Allowed | $ 14,052 |
* | Partnership Income per Federal K-1 Additional expenses/deductions allowed: | $ 400,000 |
401(k) deduction | $ 30,000 | |
Excess meals & entertainment | $ 10,000 | |
Club dues | $ 10,000 | |
Miscellaneous partner expenses | $ 10,000 | |
New Jersey partnership income | $ 340,000 - 50% allocated to New Jersey | |
** | New York allocated share of partnership income $ 340,000 X 50% = $ 170,000 | |
*** | New York other deductions 401(k) $ 15,000 Keogh $ 10,000 | |
**** | Other deductions used in determining the numerator New York Keogh adjustment of $ 10, 000. | |
The New York 401(k) deduction of $ 15,000 was used in arriving at the New York partnership adjusted income of $ 170,000 | ||
Maximum Credit Allowable: | ||
($ 240,000 X $ 34,983) /$ 580,000 = $ 14,476 | ||
Tax paid to New York on $ 255,000 of income $ 15,300 | ||
Tax paid to New York on $ 240,000 of income same as taxed by | ||
New Jersey $ 14,400, calculated as follows: | ||
($ 240,000 X $ 15,300) /$ 255,000 = $ 14,400 | ||
Credit allowed is the lower of the allocation formula or the tax paid to the other jurisdiction on the same income taxed by New Jersey, $ 14,000. |
Notes
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