Which return do I file? Living in one state and earning in another — NY, NJ and CT

You live on one side of a state line and your income comes from the other. The question is not which state gets the tax — both do — but which returns you file, in what order, and where the relief goes. There is no election out of it: none of New York, New Jersey and Connecticut has a reciprocal agreement with either of the others, so the work state taxes the income and the home state gives a credit.

This page assumes your residency status did not change during the year. If you moved, the status question comes first and is answered differently — see the last section. For when the sales tax return is due, see the tristate filing calendar; for who may hold S corporation stock, see S corporation shareholder eligibility.

The three steps every case below follows

Where you live fixes the resident return, and that state taxes everything. Where the income is earned fixes the nonresident return, and that state taxes only that. The credit is claimed on the resident return, never the other way round. One thing surprises people in all three states: income earned elsewhere is not taxed by the work state and still sets the rate there.

A New York resident is taxed on all income, wherever it is earned. No single sentence of Article 22 says so: §601 imposes the tax on “New York taxable income”, §611(a) defines that as New York adjusted gross income less deductions and exemptions, and §612(a) defines New York adjusted gross income as federal adjusted gross income with modifications. Federal adjusted gross income has no geography, so neither does a resident’s New York base.N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §611(a) · N.Y. Tax Law §612 · tax.ny.gov, Nonresident FAQs

A nonresident is taxed by New York only on New York source income — but the rate is set by everything. §601(e) computes the tax as if the nonresident were a resident and then multiplies it by a fraction whose numerator is New York source income. So income earned elsewhere is not itself taxed and still fixes the bracket. It is reported: Form IT-203 has a Federal amount column for exactly this reason, and the first filing test compares that column, not the New York one, to the standard deduction.N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §631(a), (b)(1)–(2), (c) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident) · tax.ny.gov, Nonresident FAQs

A New Jersey resident is taxed on income from everywhere, and the statute reaches that result by omission. N.J.S.A. 54A:2-1 imposes the tax on “every individual, estate or trust” with no source limit; only 54A:2-1.1 takes the nonresident back out. Unlike New York and Connecticut, the New Jersey base is not federal adjusted gross income: it is the list of income categories in 54A:5-1, so a New Jersey resident’s base cannot be described by reference to a federal figure.N.J.S.A. 54A:2-1 · N.J.S.A. 54A:1-2(m), (n) · N.J.S.A. 54A:2-1.1(a) · N.J.S.A. 54A:5-1 · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV

A nonresident is taxed by New Jersey only on New Jersey source income, computed the same way New York computes it: 54A:2-1.1 a. figures the tax as if the person were a resident and multiplies it by the New Jersey source fraction. The nonresident’s other income is not taxed and does set the rate — the NJ-1040NR has a column for income from everywhere and a column for New Jersey sources.N.J.S.A. 54A:2-1.1(a) · N.J.S.A. 54A:2-1.2 · N.J.S.A. 54A:5-8(a), (b), (e) · N.Y. Tax Law §601(a)–(c), (e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV

A Connecticut resident is taxed on all income wherever earned. §12-700(a) imposes the tax on Connecticut taxable income, which §12-701 defines through Connecticut adjusted gross income and then through federal adjusted gross income — the same shape as New York’s chain, and unlike New Jersey’s, which never touches the federal figure.Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-701(a)(1)–(3), (8), (17), (19), (20)

A nonresident is taxed by Connecticut only on Connecticut source income, on the same as-if-resident computation the other two states use: §12-700(b) figures the tax as if the person were a resident and prorates it by the Connecticut source fraction. The instructions say it outright — nonresidents “must calculate the tax in the same manner as resident individuals” and then prorate — so other income is not taxed and still sets the rate.Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders

There is no reciprocal agreement to rescue you

New Jersey has one reciprocal agreement, with Pennsylvania, and it covers compensation only. The employer guide states the general duty — withhold New Jersey tax from compensation paid to nonresident employees working in New Jersey — and names one exception, for Pennsylvania residents who file Form NJ-165. It is narrower than “reciprocity” sounds: self-employment income and gains fall outside it, it does not reach Philadelphia’s wage tax, and without the certificate the employer must still withhold.nj.gov/treasury/taxation, PA/NJ Reciprocal Income Tax Agreement (updated 2025-05-07) · NJ-WT (September 2025), p. 8, Nonresident Employees; New Jersey and Pennsylvania Reciprocal Agreement · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV · IP 2025(1), p. 8, Nonresident Wages Subject to Connecticut Withholding; Example 4

New York withholds on every nonresident’s wages for services performed in New York, with no exception based on where the employee lives. Publication NYS-50: tax “must be deducted and withheld on wages paid to New York State nonresident employees for services performed in New York State”. The only relief named anywhere is a short-stay day policy, which turns on days rather than on the employee’s state. That a New Jersey or Connecticut resident working in New York is taxed by New York and files Form IT-203 is what the sources establish; no document states that New York has no reciprocal agreements, and that sentence must not be presented as a quotation.NYS-50, Part 3-I, New York State nonresident employees · tax.ny.gov, Nonresident FAQs · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12) · IP 2025(1), p. 8, Nonresident Wages Subject to Connecticut Withholding; Example 4

Connecticut taxes a nonresident’s wages for services rendered in Connecticut, and its own employer guide assumes both neighbours tax a Connecticut resident. Circular CT: “Wages of a nonresident are subject to Connecticut income tax withholding if the wages are paid for services rendered in Connecticut”, with no exception by state of residence; and its worked example nets New York’s and New Jersey’s required withholding against Connecticut’s for a Connecticut resident employed in both. That Connecticut has no reciprocal agreement is the reader’s inference, not a sentence any document states.IP 2025(1), p. 8, Nonresident Wages Subject to Connecticut Withholding; Example 4 · portal.ct.gov/drs, Withholding Taxes, Nonresidents who work in Connecticut · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12) · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders

Where the relief is, and how far it goes

All three states give a resident credit for tax paid to another state, and none of them gives it dollar for dollar. Each grants the credit and then caps it, over a different denominator, and two of the three add a floor that the third does not.

New York’s credit for tax paid to another state is claimed on the New York resident return, on Form IT-112-R. §620(a) allows “a resident” a credit for income tax imposed by another jurisdiction “upon income both derived therefrom and subject to tax under this article”. The mirror matters: a nonresident of New York gets no credit on the IT-203 for tax paid at home. A New Jersey or Connecticut commuter claims relief in New Jersey or Connecticut.N.Y. Tax Law §620(a), (c)(1)–(2), (d) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B) · tax.ny.gov, Nonresident FAQs

New York’s credit is capped, and then floored. §620(c)(1) limits it to the share of New York tax that the income taxed by the other jurisdiction bears to total New York income; §620(c)(2) stops it reducing New York tax below what would be due if that income were excluded. No statute uses the phrase “lesser of”, and the credit is not dollar for dollar — each of the three states grants the credit and then caps it differently, over a different denominator.N.Y. Tax Law §620(a), (c)(1)–(2), (d) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B)

New Jersey’s credit for tax paid to another jurisdiction is claimed on the New Jersey resident return, on Schedule NJ-COJ. 54A:4-1(a) allows a resident taxpayer a credit for “any income tax or wage tax” imposed by another state or the District of Columbia “with respect to income which is also subject to tax under this act”. Two differences from New York: New Jersey names the wage tax, which is how a Philadelphia wage tax qualifies; and it asks only that the income be taxed here, where New York and Connecticut also require it to be derived from the other state.N.J.S.A. 54A:4-1(a)–(f) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33)

New Jersey caps the credit at the proportion of New Jersey tax that the income taxed elsewhere bears to entire New Jersey income (54A:4-1(b)), and the instructions put it plainly: it “is not necessarily a dollar-for-dollar credit”. There is no floor — 54A:4-1 has nothing corresponding to New York’s §620(c)(2) or Connecticut’s §12-704(a)(4), which is the clearest reason the three states’ credits are three different rules.N.J.S.A. 54A:4-1(a)–(f) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33)

Connecticut’s credit for tax paid to a qualifying jurisdiction is claimed on the Connecticut resident return, on Form CT-1040 Schedule 2. §12-704(a)(1) allows it for tax imposed by another state on income “derived from sources therein and which is also subject to tax under this chapter” — two conditions, both required. Connecticut adds a condition the other two lack: §12-704(c) denies the credit to a taxpayer who has claimed or will claim a credit in the other state for Connecticut tax, so someone taxed as a resident by two states cannot take both.Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12) · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders

Connecticut caps the credit at the proportion of Connecticut tax that income from the other jurisdiction bears to Connecticut adjusted gross income (§12-704(a)(2)), and floors it so the credit cannot reduce Connecticut tax below what would be due if that income were excluded (§12-704(a)(4)). That is New York’s two-part shape with a different denominator — and still not New York’s rule, because Connecticut measures income sourced to the other state where New York measures income taxed by it.Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12)

The city taxes are a separate question

New York City’s personal income tax is imposed on city residents, and on nobody else. Tax Law §1301 only authorises the City to adopt the tax; the imposition is the City’s own Administrative Code §11-1701, on “every city resident individual, estate and trust”. Because §1301(b) keeps the local law identical to Article 22 except as to rate, the city base is the state base — all income, wherever earned. The Tax Law still defines a “city nonresident individual”, but nothing imposes a tax on one: a commuter owes the city no personal income tax, reduced or otherwise.N.Y.C. Admin. Code §11-1701, opening paragraph ("General") · N.Y. Tax Law §1301(a)(1), (b) and (d); the whole section — (a), (b), (d), (e); the Senate's text has no (c) — was read · N.Y. Tax Law §1302(a) · N.Y. Tax Law §1305(a) and (b); the whole section, (a) through (d), was read · 94 N.Y.2d 577 (2000) (Wesley, J.), decided April 4, 2000, pp. 577-599; Parts I and III and footnote 2

New York City’s earnings tax on commuters no longer exists. The Department’s Notice N-00-10 states that it “has been eliminated for New York State nonresidents who had wages or self-employment income earned in New York City on or after July 1, 1999”, following City of New York v. State of New York, which struck the statute and triggered a clause repealing the entire tax authorisation. The City’s Administrative Code still prints the chapter imposing it; the Court held those provisions “are no longer effective” because the authority beneath them was repealed. So a person who works in New York City but does not live there owes the city no personal income tax and no earnings tax, whichever state they live in.N-00-10 (Spring 2000), p. 1 · 94 N.Y.2d 577 (2000) (Wesley, J.), decided April 4, 2000, pp. 577-599; Parts I and III and footnote 2 · N.Y.C. Admin. Code Title 11, Chapter 19, as printed; §11-1901(i), §11-1902(a)(1) · N.Y. Tax Law §1302(a) · N.Y. Tax Law §1305(a) and (b); the whole section, (a) through (d), was read

Yonkers taxes its residents through a surcharge on their New York State tax, not through a tax of its own. The local law imposes it on “every City resident individual, estate and trust”, and the base is the resident’s net state tax — so the surcharge follows the state tax’s residence base: everything, everywhere. The surcharge and the commuter tax are chained: Tax Law §1321(b) allows the surcharge only if the city also imposes an earnings tax on nonresidents, and §1340(a) requires the reverse. One lapsing takes the other.N.Y. Tax Law §1321(a), (b), (c)(i)–(ii) · N.Y. Tax Law §1340(a), (b)(i)–(ii), (c) model local law §§2–3 · Yonkers Code §15-100(A), §15-101, §15-111 · Yonkers Code §15-115(A), §15-116(A), (C), §15-117

Yonkers is the one city in New York that still taxes commuters. Tax Law Article 30-B authorises a city in a narrow population band — frozen to the 1980 census, which names Yonkers without saying so — to tax the earnings of nonresidents, and the Yonkers Code imposes it on wages and self-employment earnings within the city. Form Y-203 is the return. “Nonresident” means nonresident of Yonkers: there is no carve-out for New York State residents, so someone living in the next town is inside it. The tax is capped at what the person would pay as a Yonkers resident under the surcharge.N.Y. Tax Law §1340(a), (b)(i)–(ii), (c) model local law §§2–3 · N.Y. Tax Law §1321(a), (b), (c)(i)–(ii) · Yonkers Code §15-115(A), §15-116(A), (C), §15-117 · Y-203-I (2025), Who must file; Payments of estimated tax · 94 N.Y.2d 577 (2000) (Wesley, J.), decided April 4, 2000, pp. 577-599; Parts I and III and footnote 2

If you are an employee

What makes a wage a source-state wage

A nonresident’s wages are New York source income to the extent the services were performed in New York, divided by working days. The rule is not in the Tax Law at all — §631(b)(1)(B) never mentions wages — but in regulation: 20 NYCRR 132.4(b) sources the pay, and 132.18(a) divides it by working days in New York over working days everywhere, taking no account of nonworking days on either side of the fraction. The fraction is computed separately for each employer.N.Y. Tax Law §631(a), (b)(1)–(2), (c) · N.Y. Comp. Codes R. & Regs. tit. 20, §132.4(a)-(d) · N.Y. Comp. Codes R. & Regs. tit. 20, §132.18(a)-(c) · DTA No. 850197, decision dated October 14, 2025, pp. 12-14 · Commissioner's adoption dated April 9, 2003 (Arthur J. Roth), authority recital and §§1-2 · NYS-50, Part 3-I, New York State nonresident employees

New Jersey sources a nonresident’s wages by statute and divides them by form. 54A:5-8 a.(2) reaches pay “for the rendition of personal services performed in this State”, but the section contains no allocation method; the day fraction is the Division’s, in Part II of the NJ-1040NR, for an employee who “cannot readily determine” the New Jersey amount. It reaches New York’s fraction by the opposite arithmetic — starting from every day in the year and subtracting — so the two worksheets are not interchangeable.N.J.S.A. 54A:5-8(a), (b), (e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV

Connecticut applies no fraction at all until a presence threshold is crossed, and the threshold is a cliff. Under §12-711(b)(2)(A) a nonresident employee present in Connecticut for not more than the threshold number of days has no Connecticut source compensation; one day more and all of that year’s Connecticut services become Connecticut source income. The counter is presence, not work, and any part of a day counts as a whole day unless the person was merely in transit — so counting only days worked undercounts. Above the threshold, the Department’s worksheet divides the pay by working time, treating a day split between states as half a day in Connecticut.Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders

If you live in New Jersey

A New Jersey resident working in New York files a New York nonresident return, Form IT-203, and claims the credit at home on Schedule NJ-COJ of the NJ-1040. This is the only one of the six commuter cases where a state names the other state’s form: the Division directs that line 1 “must reflect the “New York State Amount” actually taxed by New York from the New York IT-203”. So the New York return is prepared first, and the figure is the income New York taxed — not the withholding on the W-2. The credit is capped at a proportion; it does not hand back the New York tax.N.Y. Tax Law §601(a)–(c), (e) · N.Y. Comp. Codes R. & Regs. tit. 20, §132.4(a)-(d) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident) · NYS-50, Part 3-I, New York State nonresident employees · N.J.S.A. 54A:2-1 · N.J.S.A. 54A:4-1(a)–(f) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33)

A New Jersey resident working in Connecticut files Form CT-1040NR/PY in Connecticut and claims the credit on Schedule NJ-COJ — the Division’s jurisdiction list carries Connecticut, so the credit is not a New York-only arrangement. Connecticut’s presence threshold applies here as it does to a New York resident: below it there is no Connecticut source compensation and no return. New Jersey’s one reciprocal agreement is with Pennsylvania and does not reach Connecticut.Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · portal.ct.gov/drs, Nonresident/Part-Year Resident Tax Information, Who Must File Form CT-1040NR/PY; Gross Income Test · IP 2025(1), p. 8, Nonresident Wages Subject to Connecticut Withholding; Example 4 · N.J.S.A. 54A:2-1 · N.J.S.A. 54A:4-1(a)–(f) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33) · nj.gov/treasury/taxation, PA/NJ Reciprocal Income Tax Agreement (updated 2025-05-07)

If you live in New York

A New York resident working in New Jersey files a New Jersey nonresident return, Form NJ-1040NR, and claims the credit at home on Form IT-112-R with the resident return IT-201. New York denies the credit outright in one case the other two states do not reach the same way: a person who is a New York resident and also a resident of the other state under its law, where that state allows a credit for the New York tax. Whether a New York City resident’s city tax is reduced by New Jersey tax is not established here — Form IT-112-R’s instructions never mention the city taxes.N.J.S.A. 54A:2-1.1(a) · N.J.S.A. 54A:5-8(a), (b), (e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV · nj.gov/treasury/taxation, PA/NJ Reciprocal Income Tax Agreement (updated 2025-05-07) · N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident)

A New York resident working in Connecticut files Form CT-1040NR/PY in Connecticut and claims the credit at home on Form IT-112-R. This is not the mirror of the Connecticut-resident case, and the difference is Connecticut’s presence threshold: below it there is no Connecticut source compensation, so there is no Connecticut return and nothing for the credit to relieve. New York has no counterpart, so a New York resident with a few Connecticut days is not in the same position as a Connecticut resident with a few New York days. A second gate follows the first — Connecticut’s Gross Income Test decides whether a return is required at all.Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · portal.ct.gov/drs, Nonresident/Part-Year Resident Tax Information, Who Must File Form CT-1040NR/PY; Gross Income Test · IP 2025(1), p. 8, Nonresident Wages Subject to Connecticut Withholding; Example 4 · N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident)

If you live in Connecticut

A Connecticut resident working in New York files Form IT-203 in New York and claims the credit on Schedule 2 of the Connecticut resident return. Connecticut’s own booklet walks this case through, listing “Compensation received for personal services performed in a qualifying jurisdiction” first among qualifying income. The order is fixed and stated: “You must first complete your income tax return(s) for the qualifying jurisdiction(s)”, and a copy must be attached to the Connecticut return or the credit is disallowed.N.Y. Tax Law §601(a)–(c), (e) · N.Y. Comp. Codes R. & Regs. tit. 20, §132.4(a)-(d) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident) · NYS-50, Part 3-I, New York State nonresident employees · Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12)

A Connecticut resident working in New Jersey files Form NJ-1040NR in New Jersey and claims the credit on Schedule 2 of the Connecticut return; Connecticut’s employer guide already assumes New Jersey withholds on its residents. No pair of the six commuter cases is a clean mirror. The return names and credit forms swap as they should; what does not swap is Connecticut’s presence threshold, New York’s dual-residency denial, and the fact that only New Jersey’s credit asks solely that the income be taxed at home rather than also sourced to the other state.N.J.S.A. 54A:2-1.1(a) · N.J.S.A. 54A:5-8(a), (b), (e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV · nj.gov/treasury/taxation, PA/NJ Reciprocal Income Tax Agreement (updated 2025-05-07) · Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12) · IP 2025(1), p. 8, Nonresident Wages Subject to Connecticut Withholding; Example 4

If you work from home

This is two questions, not one, and answering only the first costs money. The first is whether the work state taxes the days you spent at home. The second is whether your home state gives the tax back — and the three states do not agree on the answer.

If your primary office is in New York, a day you work at home is a New York working day unless your employer established a bona fide office at your home. The rule is one sentence of 20 NYCRR 132.18(a): an allowance for days worked outside New York must rest on services which “of necessity, as distinguished from convenience”, obligate the employee to out-of-state duties. The predicate is the one most summaries drop — the primary office must be in New York; an employee whose primary office is in New Jersey is outside the rule however many days are spent at home. And the default runs against the taxpayer: unless the employer specifically acted to establish such an office, the days remain taxable. The home-office exception is not the ordinary case.N.Y. Comp. Codes R. & Regs. tit. 20, §132.18(a)-(c) · TSB-M-06(5)I, Income Tax, May 15, 2006, pp. 1-6 · tax.ny.gov, Nonresident FAQs

A home office qualifies as a bona fide employer office by meeting either the single primary factor — the office contains or is near specialised facilities — or, failing that, a set number of the six secondary factors and a set number of the ten other factors. The second branch is conjunctive: meeting the secondary-factor count alone does not qualify the office, and this figure must never be stated without the other.TSB-M-06(5)I, Income Tax, May 15, 2006, pp. 1-6

The second branch of the bona fide employer office test also requires a set number of the ten other factors — among them a separate telephone line, the home address on the employer’s letterhead, exclusive business use of a defined area, business records or inventory kept there, and a home office deduction actually claimed. It is conjunctive with the secondary-factor requirement: neither count is sufficient alone, and neither may be stated without the other.TSB-M-06(5)I, Income Tax, May 15, 2006, pp. 1-6

The convenience rule follows the wages into the Yonkers commuter tax. The Department’s memorandum states that the rules for New York State nonresidents “also apply to Yonkers nonresidents” in determining the compensation subject to the nonresident earnings tax. So the day count feeding the Yonkers tax is the convenience-adjusted count, not a count of days physically in Yonkers. New York City is not the same question and this does not extend to it: the city’s commuter tax was repealed, so there is nothing for a convenience rule to attach to.TSB-M-06(5)I, Income Tax, May 15, 2006, pp. 1-6

New Jersey does not have a convenience rule of its own. It has a rule that borrows one: under 54A:5-8 e. New Jersey applies the employee’s home state’s test to a nonresident working outside New Jersey for a New Jersey employer, where that home state imposes such a test. The Division says so in terms. So the test a New York resident must pass to escape a New Jersey assessment is New York’s bona fide employer office test. On the return this reverses the day worksheet: where the rule applies, the full wage is reported as New Jersey income and Part II is not completed at all.N.J.S.A. 54A:5-8(a), (b), (e) · P.L.2023, c.125, §§1-8 (approved 2023-07-21) · nj.gov/treasury/taxation, Convenience of the Employer Sourcing Rule Enacted for Gross Income Tax (last updated 2025-04-09) · nj.gov/treasury/taxation, Convenience of the Employer Sourcing Rule FAQ (last updated 2025-10-30) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV

Which states New Jersey’s rule reaches is a condition, not a list. The statute names no state — it fires against a nonresident whose home state sources compensation to the employer’s location on convenience. The Division’s notice names three states as examples, with “such as” and a warning that the list may change; treating those three as the answer is the error. Two states are expressly out: Pennsylvania, by the reciprocal agreement, and Connecticut, because New Jersey reads Connecticut’s own rule as reciprocal — though New Jersey tells practitioners to seek formal Connecticut guidance on the reverse case.N.J.S.A. 54A:5-8(a), (b), (e) · P.L.2023, c.125, §§1-8 (approved 2023-07-21) · nj.gov/treasury/taxation, Convenience of the Employer Sourcing Rule Enacted for Gross Income Tax (last updated 2025-04-09) · nj.gov/treasury/taxation, Convenience of the Employer Sourcing Rule FAQ (last updated 2025-10-30)

Connecticut has a convenience rule, it is one sentence, and it is conditional. §12-711(b)(2)(C) sources a nonresident’s days worked outside Connecticut for the employee’s convenience “if such person’s state of domicile uses a similar test”. A New York resident working at home for a Connecticut employer is inside it, because New York uses such a test. How it interacts with Connecticut’s own presence threshold is not established: the threshold provision governs days spent in Connecticut and this one reaches days spent outside it, and nothing found reconciles them. The Department has published no guidance on its own rule that was found.Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · nj.gov/treasury/taxation, Convenience of the Employer Sourcing Rule Enacted for Gross Income Tax (last updated 2025-04-09) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12) · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders

Whether the credit follows

New Jersey allows its resident credit for tax another state imposes under a convenience rule. 54A:4-1(a) conditions the credit on income “which is also subject to tax under this act” and nothing else — it does not require, as New York and Connecticut both do, that the income be derived from the other state. A day worked at a desk in New Jersey and taxed by New York is income subject to New Jersey tax, which is the only condition. The Division directs the preparer to take the amount New York actually taxed from the IT-203, which under New York’s rule necessarily includes the home days. The credit is still capped at a proportion; the convenience days are not outside it, but the New York tax is not handed back.N.J.S.A. 54A:4-1(a)–(f) · P.L.2023, c.125, §§1-8 (approved 2023-07-21) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33) · nj.gov/treasury/taxation, Convenience of the Employer Rule Tax Credit (last updated 2025-04-22) · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d)

Connecticut allows its resident credit for convenience-sourced tax, and had to say so expressly because its statute points the other way. §12-704(a)(1) allows the credit only for tax on income derived from sources in the other state, and a day at a kitchen table in Hartford is not. The Department resolves it by writing the case into its definition of qualifying income: compensation for services performed “from a home office in Connecticut for an employer in a qualifying jurisdiction that applies a convenience of the employer test”. The carve-in is deliberate — without it those wages would fall into the exclusion two paragraphs later. This is a Department position stated in return instructions; the statute does not say it.Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12) · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · N.Y. Comp. Codes R. & Regs. tit. 20, §120.4(a)-(d)

The two cases that come out whole

A New Jersey resident whose primary office is in New York, taking days at home: New York counts those days as New York working days unless the home office is a bona fide employer office, and New Jersey allows its credit for the New York tax on them. This case comes out whole. It modifies the ordinary commuter case rather than replacing it — the forms, the order of preparation and the proportional cap are unchanged; what changes is the New York day fraction, which no longer matches where the employee actually was. The credit is capped, so the protection from double tax reaches only as far as New Jersey’s own rate does.N.Y. Comp. Codes R. & Regs. tit. 20, §132.18(a)-(c) · TSB-M-06(5)I, Income Tax, May 15, 2006, pp. 1-6 · N.J.S.A. 54A:4-1(a)–(f) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33) · nj.gov/treasury/taxation, Convenience of the Employer Rule Tax Credit (last updated 2025-04-22)

A Connecticut resident whose primary office is in New York, taking days at home: New York counts them as New York days on the same rule, and Connecticut allows its credit — reaching the same result as New Jersey by a different route, because Connecticut wrote the home-office case into its definition of qualifying income. Connecticut’s own presence threshold is not in play: that governs what Connecticut taxes a nonresident on, and this is a Connecticut resident, whom Connecticut taxes on everything.N.Y. Comp. Codes R. & Regs. tit. 20, §132.18(a)-(c) · TSB-M-06(5)I, Income Tax, May 15, 2006, pp. 1-6 · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12)

If you own the business

What makes business income source income

A nonresident’s business profits are New York source income to the extent the business is carried on in New York — and here Tax Law §631(b)(1)(B) is exactly the right provision, the same subparagraph that says nothing about wages. What “carried on in this state” means is regulation: maintaining a place where the business is “systematically and regularly carried on”, a definition the regulation itself calls not exclusive. Where the business straddles the line, books and records come first and the formula is the fallback — a taxpayer whose accounts do disclose the New York portion never reaches the formula at all.N.Y. Tax Law §631(a), (b)(1)–(2), (c) · N.Y. Comp. Codes R. & Regs. tit. 20, §132.4(a)-(d) · N.Y. Comp. Codes R. & Regs. tit. 20, §132.15(a)-(f) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident)

New Jersey sources a nonresident’s business profits under the same clause that sources wages — 54A:5-8 a.(2), income “In connection with a trade, profession, occupation carried on in this State”. The statute supplies no allocation method for a business either; where the business is carried on both inside and outside New Jersey the taxpayer must complete Form NJ-NR-A, and must do so for each business rather than once per taxpayer. What that schedule’s fraction is has not been established here, and it must not be assumed to match New York’s.N.J.S.A. 54A:5-8(a), (b), (e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV

Connecticut’s source clause for business income matches New York’s almost word for word, and its method does not. The fifteen-day presence threshold does not reach an owner: §12-711(b)(2)(D) confines that whole subdivision to compensation for personal services rendered by a nonresident employee, so a nonresident with a single day of Connecticut business activity is sourced from the first day. Importing the employee threshold into an owner case is the single most likely error here, and the statute forecloses it. Connecticut apportions by one gross income percentage; it abandoned the three-factor average in 2017, so an older secondary source states the wrong rule and looks right. Books and records come first here too.Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders

Whether the federal S election means anything

Three states, three different defaults — and this is where entity choice, not the state line, changes the answer.

A federal S election does not make a New York S corporation. Under Tax Law §660(a) the election is the shareholders’, it is ineffective unless every shareholder makes it, and it is available only to a corporation already subject to the general business corporation franchise tax. The form is CT-6, whose title is the rule: “Election by a Federal S Corporation to be Treated As a New York S Corporation”. But “never” is the wrong word: §660(i) deems the election made for a corporation whose investment income exceeds a stated share of its federal gross income, and the form’s own instructions do not mention that exception at all. A preparer working from the form alone would not know it exists.N.Y. Tax Law §660(a), (b)(1)-(6), (c), (h), (i) · N.Y. Tax Law §208(1-A) · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · Form CT-6 (12/20), shareholders' unanimous consent block · CT-6-I (12/20), General information; Who may elect; When to make the election

A nonresident shareholder’s share of an S corporation is New York source income only where the New York election is in effect, and the portion is determined under the corporate franchise tax allocation rules rather than the personal income tax ones. So a nonresident sole proprietor and a nonresident shareholder with the same New York footprint divide their income by different methods, and the shareholder’s figure arrives already computed on the corporation’s return. What a nonresident shareholder owes when no New York election is in effect is not established here, and must not be inferred in either direction.N.Y. Tax Law §631(a), (b)(1)–(2), (c) · N.Y. Tax Law §632(a)(1)-(2), (b), (c), (e) · N.Y. Tax Law §208(1-A) · N.Y. Tax Law §660(a), (b)(1)-(6), (c), (h), (i) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident)

Where the corporation is subject to New York’s franchise tax and no CT-6 was filed, a New York resident shareholder does not report the federal flow-through at all: §612 subtracts the income, adds back the losses, and taxes the distributions instead — the shareholder is taxed like the owner of a C corporation. This is the exception, not the rule. A New York resident owning an S corporation that does no business in New York keeps the flow-through in New York income, because no such election was ever available to that corporation and the modifications do not reach it. What the modifications do to the resident credit is not established.N.Y. Tax Law §612 · N.Y. Tax Law §617(a) · N.Y. Tax Law §660(a), (b)(1)-(6), (c), (h), (i) · N.Y. Tax Law §208(1-A) · IT-225-I

New Jersey is New York’s mirror image: a federal S corporation is a New Jersey S corporation automatically unless it elects out, with the consent of every shareholder. There is no New Jersey counterpart to Form CT-6 because there is nothing to opt into. It used to be an opt-in, and the statute still shows the scar — the subsection that once held the affirmative election now reads only that it was deleted by amendment. A secondary source written before that change describes a New Jersey election that no longer exists and reads as current. Unanimity appears on both sides of the line: New York needs every shareholder to opt in, New Jersey every shareholder to opt out, so “all shareholders must consent” distinguishes neither state.N.J.S.A. 54A:5-10 · N.J.S.A. 54:10A-5.22(a)-(e)

New Jersey divides a nonresident shareholder’s share by the corporation’s own business tax allocation factor — 54A:5-8 a.(6) sources “S corporation income allocated to this State”, a defined term pointing at the corporation business tax. This is the one place New York and New Jersey genuinely agree on mechanics, and they agree by pointing at different statutes. The figure reaches the shareholder on a schedule that rides on the corporation’s return, not the shareholder’s, and the share is taxed whether or not it was actually distributed.N.J.S.A. 54A:5-8(a), (b), (e) · N.J.S.A. 54A:5-10 · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV

Connecticut has no state-level S election at all: an S corporation is simply one that is an S corporation federally. Its source rule is New York’s subparagraph with the election condition left out, because there is no election to point at, and it sends the shareholder’s portion back to the same section that sources a sole proprietor’s business income. That is the third different answer to one question: New York sends the shareholder to the franchise tax rules, New Jersey to the corporation business tax allocation factor, Connecticut to its own personal income tax sourcing section.Conn. Gen. Stat. §12-701(a)(1)–(3), (8), (17), (19), (20) · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · Conn. Gen. Stat. §12-712(a)-(d) · N.Y. Tax Law §631(a), (b)(1)–(2), (c) · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders

Sole proprietor: the six cases

A New Jersey resident whose business is carried on in New York files Form IT-203 in New York and claims the credit on Schedule NJ-COJ, with the New York return prepared first because the Division directs the preparer to import the amount New York taxed. Nothing in the credit instructions singles out sole proprietors, and that absence is the finding: the exclusion list names S corporation and partnership income allocated to New Jersey and says nothing about a proprietor’s profits. The S corporation case is where that carve-out bites. Whether New York City’s unincorporated business tax also applies is not established.N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §631(a), (b)(1)–(2), (c) · N.Y. Comp. Codes R. & Regs. tit. 20, §132.15(a)-(f) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident) · N.J.S.A. 54A:2-1 · N.J.S.A. 54A:4-1(a)–(f) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33)

A New Jersey resident whose business is carried on in Connecticut files Form CT-1040NR/PY and claims the credit on Schedule NJ-COJ; the Division’s jurisdiction list carries Connecticut. No presence threshold applies to an owner. The difference between the three states’ credit statutes does not bite on these facts — business income of a business carried on in Connecticut satisfies the stricter derivation test as well as New Jersey’s looser one — so all three would reach the same result here.Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders · portal.ct.gov/drs, Nonresident/Part-Year Resident Tax Information, Who Must File Form CT-1040NR/PY; Gross Income Test · N.J.S.A. 54A:2-1 · N.J.S.A. 54A:4-1(a)–(f) · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33) · nj.gov/treasury/taxation, PA/NJ Reciprocal Income Tax Agreement (updated 2025-05-07)

A New York resident whose business is carried on in New Jersey files Form NJ-1040NR in New Jersey, allocating on Form NJ-NR-A if the business straddles the line, and claims the credit at home on Form IT-112-R with the resident return IT-201. New York’s credit requires the income to be both derived from the other state and taxed at home, and business income of a business carried on in New Jersey satisfies both. New York’s dual-residency denial applies here as everywhere, and Form IT-112-R’s instructions never mention the city taxes.N.J.S.A. 54A:2-1.1(a) · N.J.S.A. 54A:5-8(a), (b), (e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV · nj.gov/treasury/taxation, PA/NJ Reciprocal Income Tax Agreement (updated 2025-05-07) · N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident)

A New York resident whose business is carried on in Connecticut files Form CT-1040NR/PY and claims the credit at home on Form IT-112-R. Unlike the employee pair, this one genuinely mirrors: Connecticut’s fifteen-day presence threshold is confined by statute to employee compensation and does not reach a business owner, so a New York resident is sourced to Connecticut from the first day of activity. The employee threshold must not be imported here. Connecticut’s Gross Income Test remains a separate gate on whether a return is required.Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders · portal.ct.gov/drs, Nonresident/Part-Year Resident Tax Information, Who Must File Form CT-1040NR/PY; Gross Income Test · N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident)

A Connecticut resident whose business is carried on in New York files Form IT-203 in New York and claims the credit on Schedule 2, and Connecticut’s booklet names this case rather than leaving it to inference — “Income from a business, trade, or profession carried on in a qualifying jurisdiction” is on its list of qualifying income. The New York return is completed first and a copy must be attached to the Connecticut return or the credit is disallowed.N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §631(a), (b)(1)–(2), (c) · N.Y. Comp. Codes R. & Regs. tit. 20, §132.15(a)-(f) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident) · Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12)

A Connecticut resident whose business is carried on in New Jersey files Form NJ-1040NR and claims the credit on Schedule 2 of the Connecticut return. The six proprietor cases mirror more cleanly than the six employee cases, and that is itself the finding — the asymmetry that broke three employee pairs was Connecticut’s presence threshold, and it is confined to employees. What still does not swap: New York’s dual-residency denial, New Jersey’s looser credit condition, and the fact that the three states divide a partly-within business by three different methods.N.J.S.A. 54A:2-1.1(a) · N.J.S.A. 54A:4-1(a)–(f) · N.J.S.A. 54A:5-8(a), (b), (e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV · nj.gov/treasury/taxation, PA/NJ Reciprocal Income Tax Agreement (updated 2025-05-07) · Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B)

S corporation shareholder: the six cases

Where the New York election is in effect — a CT-6 has been filed, or the statute deems one — a New Jersey resident shareholder of a New York S corporation files Form IT-203 and claims the credit on Schedule NJ-COJ. And New Jersey denies the credit for part of it: 54A:4-1(c) allows no credit for tax imposed on S corporation income allocated to New Jersey, so a resident whose corporation operates in both states loses the credit to that extent. A corporation with no New Jersey activity allocates nothing there and the denial has nothing to bite on. How much it takes in a given year is not established. The sole proprietor case has no such carve-out — choosing an entity form changes this answer.N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §631(a), (b)(1)–(2), (c) · N.Y. Tax Law §632(a)(1)-(2), (b), (c), (e) · N.Y. Tax Law §660(a), (b)(1)-(6), (c), (h), (i) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident) · N.J.S.A. 54A:2-1 · N.J.S.A. 54A:4-1(a)–(f) · N.J.S.A. 54A:5-10 · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33)

A New Jersey resident shareholder of a Connecticut S corporation files Form CT-1040NR/PY and claims the credit on Schedule NJ-COJ — subject again to 54A:4-1(c), which allows no credit for tax on S corporation income allocated to New Jersey. Whether the corporation has any such allocated income at all is a fact about the corporation, not about where the shareholder lives: a Connecticut-only corporation allocates nothing to New Jersey. The size of the denial is not established. New Jersey’s Pennsylvania agreement does not reach Connecticut, and covers compensation only in any event.Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-701(a)(1)–(3), (8), (17), (19), (20) · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · Conn. Gen. Stat. §12-712(a)-(d) · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders · portal.ct.gov/drs, Nonresident/Part-Year Resident Tax Information, Who Must File Form CT-1040NR/PY; Gross Income Test · N.J.S.A. 54A:2-1 · N.J.S.A. 54A:4-1(a)–(f) · N.J.S.A. 54A:5-10 · 2025 NJ-1040 Instructions, Schedule NJ-COJ (pp. 31-33) · nj.gov/treasury/taxation, PA/NJ Reciprocal Income Tax Agreement (updated 2025-05-07)

Where the corporation is not taxable in New York, a New York resident shareholder of a New Jersey S corporation files Form NJ-1040NR — the corporation is a New Jersey S corporation by default, and its allocation factor computes the share — and claims the credit at home on Form IT-112-R. This holds only because the corporation is outside New York’s franchise tax. If it also did business in New York without a CT-6 it would be a New York C corporation, the flow-through would leave New York income altogether and distributions would be taxed instead, and what becomes of the credit then is expressly not established.N.J.S.A. 54A:2-1.1(a) · N.J.S.A. 54A:5-8(a), (b), (e) · N.J.S.A. 54A:5-10 · N.J.S.A. 54:10A-5.22(a)-(e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV · N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §612 · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · N.Y. Tax Law §208(1-A) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B)

Where the corporation is not taxable in New York, a New York resident shareholder of a Connecticut S corporation files Form CT-1040NR/PY — Connecticut needs no election, and the share is sourced like any other business income — and claims the credit at home on Form IT-112-R. The fifteen-day employee threshold has nothing to do with this case. As with the New Jersey version, this holds only because the corporation is outside New York’s franchise tax; a Connecticut corporation that also did business in New York without a CT-6 would change the New York half entirely.Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-701(a)(1)–(3), (8), (17), (19), (20) · Conn. Gen. Stat. §12-711(a)-(c), and the section history note printed below the text · Conn. Gen. Stat. §12-712(a)-(d) · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders · portal.ct.gov/drs, Nonresident/Part-Year Resident Tax Information, Who Must File Form CT-1040NR/PY; Gross Income Test · N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §612 · N.Y. Tax Law §620(a), (c)(1)–(2), (d) · N.Y. Tax Law §208(1-A) · IT-112-R-I (2025), General instructions; Line instructions, Part 1, Residents (columns A and B)

Where the New York election is in effect, a Connecticut resident shareholder of a New York S corporation files Form IT-203 and claims the credit on Schedule 2. Connecticut’s booklet does not name S corporation income in its list of qualifying income, so the statute is doing the work here rather than the instruction — the list is illustrative and must not be quoted as though it were the test. The booklet does say expressly that a resident may credit an out-of-state pass-through entity’s tax where that entity is subject to a tax substantially similar to Connecticut’s.N.Y. Tax Law §601(a)–(c), (e) · N.Y. Tax Law §631(a), (b)(1)–(2), (c) · N.Y. Tax Law §632(a)(1)-(2), (b), (c), (e) · N.Y. Tax Law §660(a), (b)(1)-(6), (c), (h), (i) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident) · Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12)

A Connecticut resident shareholder of a New Jersey S corporation files Form NJ-1040NR and claims the credit on Schedule 2 — the only one of the twelve owner cases in which neither state asks a question about elections and neither denies the credit. The twelve do not reduce to one sentence, and what varies is not the state line but the entity: whether a state recognises the federal S election at all, whether the home state’s credit reaches the tax paid, and which body of rules divides the income all change with the form the business takes. The same taxpayer with the same customers gets a different answer as a proprietor.N.J.S.A. 54A:2-1.1(a) · N.J.S.A. 54A:4-1(a)–(f) · N.J.S.A. 54A:5-8(a), (b), (e) · N.J.S.A. 54A:5-10 · N.J.S.A. 54:10A-5.22(a)-(e) · 2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV · Conn. Gen. Stat. §12-700(a), (b) · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12)

Two things every case above assumes

Each case assumes the owner paid the tax on the business income, and that the residency status held all year. Where an entity elected into a pass-through entity tax, some of the tax was paid by the entity and the credit moves to a different provision. All three states have such a tax — ask whether the entity paid it before assuming the owner did.

New York has an elective pass-through entity tax, and where the entity elected in, the resident’s credit is computed under a different provision from the ordinary resident credit, with its own conditions — one of which is that an S corporation paying such a tax was treated as a New York S corporation. Every owner case assumes the tax on the business income was paid by the owner; ask whether the entity paid it instead. Nothing about the rate, base or computation is established here.N.Y. Tax Law §862 · N.Y. Tax Law §620(a), (c)(1)–(2), (d)

New Jersey has an elective pass-through business alternative income tax, and a resident’s credit for another state’s similar tax sits in a separate subsection from the ordinary resident credit. This pointer matters more in New Jersey than elsewhere: another subsection denies a credit for tax paid on behalf of a person other than the taxpayer, which is what an entity-level tax is, so a reader who stops there would conclude such a tax can never be credited. No rate, threshold or computation is established here.N.J.S.A. 54A:12-3(a), (b)(1) · N.J.S.A. 54A:12-5(a)(1), (b) · N.J.S.A. 54A:4-1(a)–(f)

Connecticut has a pass-through entity tax, and it became elective rather than starting that way — it was compulsory until a 2023 act made it elective for taxable years beginning in 2024, the reverse of the direction a reader assumes. A member gets a credit for its share, and a resident member a credit for another state’s substantially similar tax. No rate, base, credit multiplier or election deadline is established here.Conn. Gen. Stat. §12-699(a)-(i), and the section history note printed below the text · Conn. Gen. Stat. §12-704(a)(1)–(4), (c), (d) · CT-1040 Instructions (Rev. 12/25), Schedule 2 and Schedule 2 - Worksheet, Example 1; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (p. 12)

Every case here assumes a residency status that did not change during the year. New York taxes nonresidents and part-year residents under one imposition and on one form, but not by one computation — the instructions give every income line a separate part-year rule, and for business income it adds back the part received while a resident, which no nonresident does. An owner who moved during the year does not read these cases and take the answer; the status question comes first and is not answered here.N.Y. Tax Law §601(a)–(c), (e) · IT-203-I (2025), Who must file; Nonresidents: New York source income; Part-year residents: New York source income; How are you taxed as a nonresident or as a part-year resident?; Item A (filing status); Item G; Item H; Line 6 (Business income or loss), Business carried on in New York State, Business carried on both in and out of New York State; Definitions (Nonresident, Part-year resident)

Every New Jersey case here assumes a status that did not change during the year. The Division puts the part-year rule in the schedule instructions rather than in a separate provision: a part-year nonresident prorates the pro rata share of S corporation income by the days of nonresidence, and a partner’s distributive share the same way. That day-proration does no work in any of the cases above, which is the point. No part-year outcome is established here.2025 NJ-1040NR Instructions, p. 2 (Do You Have to File); Pennsylvania Residents; line 15 column B; Form NJ-1040NR Part II, lines 69-75, and Part III (Allocation of Business Income to New Jersey); lines 18, 23 and 24 columns A and B; Schedule NJ-BUS-1 Parts I, III (Distributive Share of Partnership Income) and IV (Net Pro Rata Share of S Corporation Income), including the Part-Year Nonresidents paragraph that closes each of Parts III and IV

Connecticut gives the part-year case its own section, which is the clearest statement of this fence any of the three states makes: a part-year resident’s Connecticut income is the sum of the residence-period income, the nonresidence-period source income, and a set of special accruals. Two computations and a third element none of the cases above mentions. The special accruals were not read, and they are the part that most affects an owner who sells a business in the year of a move.Conn. Gen. Stat. §12-717(a) · CT-1040NR/PY Instructions (Rev. 12/25), Lines 8, 9 and 11; Employee Apportionment Worksheet Instructions; Income Derived From or Connected With Sources Within a Qualifying Jurisdiction; Schedule CT-SI Instructions, Line 5 (allocation of income and apportionment fraction) and Line 6 (partnerships, S corporations); Schedule CT-1040AW, Partners and S Corporation Shareholders

The figures

Almost nothing on this page is a number — a resident credit is a formula and the tests are multi-factor. These three are the exceptions.

Where this stops

Four questions have no published answer and this page does not invent one. New York has never said whether its resident credit reaches tax that New Jersey or Connecticut imposes under a convenience rule — both neighbours addressed the mirror case in print and New York did not — so the reverse commute, a New York resident working from home for a New Jersey or Connecticut employer, is unresolved on the credit side. Connecticut has not said whether its own convenience rule reaches a New Jersey resident, because New Jersey applies another state's test rather than having one of its own, and whether that counts as “a similar test” is arguable both ways. And whether a nonresident sole proprietor owes New York City's unincorporated business tax was not researched here, though New York State's own instructions warn that it may be due. A preparer meeting any of these facts should expect to take a position.

Partnerships and multi-member LLCs are named in the statutes behind the owner cases and are not separately covered here. Nothing on this page states an outcome for one.

Myung Keon Kim CPA prepares and files New York and New Jersey returns. Connecticut appears throughout for comparison, because a client with a New York or New Jersey business routinely asks how the neighbouring state differs. It is not a service offered here.

Last verified: 2026-09-09