Many states have reciprocity agreements with neighboring states to simplify nonresident income tax filing. New York and New Jersey, however, do not have a reciprocity agreement. (In 2015, the U.S. Supreme Court ruled against double taxation on the same income, stating that two or more states are no longer permitted to tax the same earnings.) New York and New Jersey do not have a reciprocity agreement. The taxpayer must file two state income tax returns:
- A nonresident return for the state in which they work;
- A resident return for the state in which they reside.
Note: Always complete the nonresident state return(s) first before completing the resident state return so that the resident return can accurately calculate the credit for taxes paid to the nonresident state(s).