1040-NJ: Adjustments made to NY income for NJ-1040, Schedule A

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When calculating New Jersey Schedule A, Credit for taxes paid to other state or jurisdiction, any income taxed by New York may get adjusted. The New York income that transfers to Form NJ-1040, Schedule A for the credit for taxes paid includes Form IT-203, NYS column - wages, alimony received, taxable IRA, taxable pensions, plus:

Income type If the result is... Then include...
Business + Farm Income netted NY is net loss NY loss
NY and Fed are income Lower of Fed or NY
NY > 0; Fed is loss Zero
Capital and Other Gain/Loss, net NY is net loss NY loss
NY and Fed are income Lower of Fed or NY
NY > 0; Fed is loss Zero
Rent Income NY is net loss NY loss
NY and Fed are income Lower of Fed or NY
NY > 0; Fed is loss Zero
Other Income NY is net loss NY loss
NY and Fed are income Lower of Fed or NY
NY > 0; Fed is loss Zero


The application then adjusts this total calculated amount by the following on Form IT-203, NYS column:

  • Subtracting the NYS portion of federal adjustments,
  • Adding the NYS portion of public employee 414(h),
  • Adding the NYS portion of Other additions (line 22),
  • Subtracting the NY portion of New York State, local and federal pensions,
  • Subtracting the NYS portion of pension and annuity exclusion, and
  • Subtracting the NYS portion of Other subtractions (line 29).
The calculation ignores interest, dividends, state refunds, unemployment, and taxable Social Security. Amounts which are assumed to be zero are not taxed by New Jersey, or are eventually adjusted out of New York nonresident income.

If this total income amount is less than the NY AGI calculating on Form IT-203, the lower amount is used in the calculation of the income percentage on Form IT-203, Page 3. This income percentage is then applied to the total tax to calculate the amount (minus any credits) that transfers to the Tax paid to other state or jurisdiction field on the NJSTCr screen in the NJ Credits folder. 

Note: You can review amounts the application transfers to the NJSTCr screen on the New York for New Jersey Nonresident Income and Tax Worksheet calculated in New York nonresident return.

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